Aryaman Financial Services Ltd Management Discussions

Aryaman Financial Services Limited ("AFSL" or "the Company") is a SEBI-registered Category I Merchant Banker with over a decade of experience in providing integrated merchant banking and financial advisory services. The Company offers a comprehensive range of capital market and corporate finance solutions, catering to the diverse funding and strategic requirements of corporate clients across India.

The Company is primarily engaged in lead management and syndication of public issues, including Initial Public Offerings (IPOs), Follow-on Public Offers (FPOs), Rights Issues, Qualified Institutional Placements (QIPs), Preferential Issues, Private Investment in Public Equity (PIPE) transactions, venture capital funding, and other capital raising assignments. AFSL also provides advisory services in corporate restructuring, mergers and acquisitions (M&A), open offers, buybacks, delisting offers, valuation, ESOP certifications, fairness opinions, and other strategic corporate finance assignments.

The Company has established a strong presence in the SME capital market segment, assisting emerging enterprises in accessing public capital through the SME platforms of BSE Limited and NSE Limited. By enabling SMEs to raise equity capital in a regulated environment, AFSL continues to contribute towards the growth of Indias entrepreneurial ecosystem while creating value for investors and stakeholders.

During the financial year 2025-26, the Company successfully managed and completed several capital market transactions across both the SME and Main Board segments. The Company remains focused on delivering efficient execution, regulatory compliance, and value-added advisory services, thereby strengthening its position as a trusted merchant banker.

Pursuant to the regulatory framework approved by SEBI for the categorization of Merchant Bankers, the Company continues to be registered as a Category I Merchant Banker. This enhanced capital base reinforces the Companys capability to undertake a wider spectrum of merchant banking assignments, including lead management for Main Board public issues.

The Company generates its principal revenue from merchant banking and advisory services. In addition, through its subsidiary and group companies, it offers complementary financial services, including stock and commodity broking, enabling clients to benefit from an integrated financial services platform.

INDUSTRY OUTLOOK

The Economic Survey 2025-26 highlights the financial services sector as a key driver of Indias sustainable economic growth and resilience. While the Indian economy continues to demonstrate strong macroeconomic fundamentals, including stable growth, moderating inflation, and healthy corporate and banking sector balance sheets, the Survey also underscores the need for prudent capital allocation and disciplined risk management in an increasingly uncertain global environment.

The Survey notes that India continues to rely on foreign capital to support investment and economic expansion, making efficient financial intermediation critical. As a result, financial institutions are expected to focus on quality-led growth through stronger credit appraisal, prudent underwriting, co-lending arrangements, credit enhancement mechanisms, and innovative financing structures rather than relying solely on balance sheet expansion.

The evolving monetary and regulatory landscape further reinforces the importance of maintaining robust asset quality, adequate provisioning, and effective risk management practices. Institutions with sound governance frameworks, disciplined lending standards, and strong capital positions will be better placed to navigate economic cycles and deliver sustainable long-term growth.

Global economic uncertainties, including geopolitical developments, trade disruptions, and capital flow volatility, continue to pose challenges to financial markets. The Survey highlights the importance of strengthening domestic financial capacity through deeper capital markets, enhanced participation by domestic institutional investors, and expansion of long-term savings channels such as insurance, pension, and mutual fund investments. These measures are expected to improve financial stability while reducing dependence on external capital.

The increasing adoption of Digital Public Infrastructure (DPI) continues to transform Indias financial ecosystem by enabling seamless digital payments, customer onboarding, credit delivery, and data sharing. At the same time, the growing use of artificial intelligence and advanced technologies presents significant opportunities to enhance operational efficiency, improve customer experience, strengthen fraud prevention, and support data-driven decision-making. However, these advancements also require robust cybersecurity, governance frameworks, regulatory compliance, and responsible deployment of emerging technologies.

Overall, the Economic Survey 2025-26 envisages a financial sector that is resilient, technology-driven, and well-governed, with a greater focus on efficient capital allocation, financial stability, and long-term value creation. The evolving regulatory framework, supported by innovation and sound risk management, is expected to strengthen the sectors ability to contribute meaningfully to Indias long-term economic growth.

DEVELOPMENTS IN THE INDUSTRY:

Indias primary capital market remained resilient during the first nine months of FY 2025-26 despite global economic uncertainty and geopolitical challenges. Strong corporate fundamentals, favourable sectoral opportunities, robust domestic liquidity, and sustained investor participation continued to support healthy activity in the IPO market.

During the period, 94 companies collectively raised approximately 1.6 trillion through Main Board IPOs, broadly matching the record fundraising levels achieved in FY 2024-25 and significantly exceeding those of FY 2023-24. While the average issue size moderated with the increasing participation of mid-sized companies, the overall pace of capital raising remained strong.

Investor participation continued to be driven by domestic institutional investors, mutual funds, insurance companies, and a growing retail investor base. The depth of domestic liquidity enabled the market to absorb new issuances even during periods of heightened volatility.

The IPO market also witnessed a notable shift in investor preferences. Investors adopted a more selective approach, placing greater emphasis on reasonable valuations, sustainable earnings, sound corporate governance, healthy balance sheets, and clearly defined utilisation of proceeds. Consequently, well-managed companies with credible growth strategies continued to attract strong demand, while aggressively priced offerings received a more measured response.

Although Offers for Sale (OFS) continued to account for a significant portion of IPO proceeds, the share of fresh issue capital increased compared with the previous year. Issuers increasingly utilised funds for debt reduction, capacity expansion, capital expenditure, and working capital requirements, reflecting a greater focus on business growth and long-term value creation. This trend reinforces investor preference for capital raising that supports sustainable expansion and strengthens corporate fundamentals.

INDIAN CAPITAL MARKETS

Despite persistent volatility across global financial markets, the Indian primary capital market has continued to demonstrate remarkable resilience. The Initial Public Offering (IPO) market remains one of the strongest segments of the capital markets ecosystem, with a healthy pipeline of companies seeking to raise capital for business expansion, debt reduction, and shareholder monetisation.

Over the past five years, IPO activity in India has witnessed consistent growth, with the momentum continuing into 2026. A steady stream of public offerings across both the Main Board and SME platforms reflects strong entrepreneurial activity, favourable domestic liquidity, and sustained investor participation. As one issue closes, several new offerings continue to enter the market, underscoring the depth and maturity of Indias capital markets. A notable structural shift has been the increasing prominence of the SME segment. While Main Board IPOs accounted for the majority of listings in earlier years, SME IPOs have emerged as a significant contributor to overall market activity, reflecting improved access to capital for emerging businesses and growing investor interest in high-growth enterprises.

Although IPO issuance has remained robust, investor behaviour has become increasingly selective. Unlike previous years, when listing gains were the primary driver of investor enthusiasm, market participants are now placing greater emphasis on business fundamentals, valuation, profitability, corporate governance, and the effective utilisation of issue proceeds. Consequently, listing gains have moderated compared to the exceptional performance witnessed during 2024.

The moderation in post-listing returns during 2025 and early 2026 reflects a more balanced and sustainable market environment. Regulatory measures introduced by SEBI, together with a more cautious investor approach, have contributed to improved price discovery and more rational valuations. Companies with strong fundamentals, transparent governance practices, and credible growth strategies continue to attract healthy investor demand, while aggressively priced issues have received a relatively measured response.

Overall, the Indian IPO market continues to exhibit strong long-term potential, supported by expanding domestic participation, increasing depth of capital markets, and a robust pipeline of companies seeking public capital. The evolving market environment is expected to encourage quality issuances, strengthen investor confidence, and promote sustainable growth in the primary market.

OPPORTUNITIES AND THREATS OF A MERCHANT BANKER

Opportunities:

1. Continued Government initiatives promoting entrepreneurship, ease of doing business, and startup growth.

2. Increasing adoption of SME exchanges, enabling greater access to capital for small and medium enterprises.

3. Rising private equity and venture capital investments, creating opportunities in IPOs, mergers & acquisitions, and corporate advisory.

4. Sustained growth in Indias capital markets, supporting higher demand for merchant banking and investment banking services.

5. Growing requirement for valuation, fairness opinions, and transaction advisory services across corporate transactions.

6. Positive long-term economic outlook and expanding corporate investment, creating opportunities across financial services.

7. Strong domestic institutional and retail participation in equity markets through mutual funds and direct investments.

8. Increasing retail investor participation in the primary market, supporting growth in IPO-related activities.

Threats:

1. Volatility in capital markets arising from interest rate movements, geopolitical developments, macroeconomic conditions, regulatory changes, and domestic political events.

2. Intense competition within the merchant banking and financial services industry, resulting in pricing pressure on fees and commissions.

3. Unfavourable market conditions affecting capital raising activities, mergers & acquisitions, and overall transaction volumes.

4. Regulatory changes and evolving compliance requirements that may increase operational costs and execution time-lines.

5. Dependence on favourable capital market conditions for successful execution of public issues and fundraising mandates.

6. Increasing competition from established domestic and global investment banks, particularly in institutional and investment banking businesses.

INTERNAL CONTROL SYSTEM AND ITS ADEQUACY:

The Company has implemented a comprehensive internal control framework that is commensurate with the size, nature, and complexity of its operations. These controls are designed to safeguard the Companys assets, ensure the accuracy and reliability of financial and operational information, enhance operational efficiency, and ensure compliance with applicable laws, regulations, and internal policies.

The internal control environment is supported by well-defined policies, standard operating procedures, delegated authority levels, and robust approval mechanisms for key business and financial transactions. Periodic internal audits are carried out to evaluate the effectiveness of the control framework, identify areas for improvement, and ensure timely implementation of corrective actions.

The Audit Committee of the Board, chaired by a Non-Executive Independent Director, provides oversight of the Companys internal control systems. The Committee regularly reviews internal audit reports, assesses the adequacy of internal controls, monitors compliance with statutory and regulatory requirements, and ensures that significant audit observations are appropriately addressed by the management.

The Company periodically reviews and strengthens its internal control systems to align with evolving business requirements, regulatory developments, and industry best practices. This continuous review process reinforces a strong governance framework and supports effective risk management across the organization.

ANALYSIS OF FINANCIAL PERFORMANCE / DISCUSSION OF FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

We are pleased to report a significant improvement in our financial performance, driven by a combination of favorable market conditions and several key assignments in Merchant Banking. The following summary highlights our financial results for the past two years:

Standalone and Consolidated Financial Performance:

(Rs. in lakhs)

Particulars	Consolidated		Standalone
	31-Mar-2026	31-Mar-2025	31-Mar-2026	31-Mar-2025
Total Income	8,440.58	11809.60	1,751.34	2116.24
Profit after Tax	3,813.58	4520.07	689.55	611.83

OVERALL PERFORMANCE

The Company reported a stable financial and operating performance for the financial year 2025-26 despite a dynamic business environment. On a standalone basis, the Company recorded a total income of 1,751.34 lakhs as compared to 2,116.24 lakhs in the previous year. However, profit after tax increased by 12.70% to 689.55 lakhs from 611.83 lakhs in FY 2024-25, reflecting improved operational efficiency, prudent cost management, and disciplined execution of business strategies. On a consolidated basis, the Company reported a total income of 8,440.58 lakhs and a profit after tax of 3,813.58 lakhs during the year. The Companys resilient business model, strong governance practices, and continued focus on operational excellence enabled it to maintain healthy profitability while creating sustainable value for its stakeholders.

FUTURE OUTLOOK

As the Company enters FY 2026-27, the outlook for Indias capital markets remains positive, supported by strong domestic economic fundamentals, increasing investor participation, and a robust pipeline of companies seeking access to public capital. While global uncertainties arising from geopolitical developments, trade policies, interest rate movements, and capital flow volatility may continue to influence market sentiment, Indias resilient economy and well-regulated financial markets are expected to provide a stable foundation for long-term growth.

The IPO market is expected to witness a more balanced and mature phase, with greater emphasis on reasonable valuations, sound corporate governance, efficient capital allocation, and sustainable business models. Investors are increasingly focusing on the quality of issuers, utilisation of proceeds, and long-term value creation rather than short-term listing gains.

The Company remains optimistic about the opportunities in the merchant banking sector and is well positioned to leverage its experience, strong client relationships, and execution capabilities to support businesses in their capital-raising and strategic advisory requirements. With a continued focus on regulatory compliance, operational excellence, and client-centric solutions, the Company aims to strengthen its market position and deliver sustainable value to all its stakeholders.

RISKS AND CONCERN:

The financial services industry operates in an environment characterized by rapidly evolving market conditions, regulatory developments, technological advancements, and global economic uncertainties. The Company recognises that effective risk management is fundamental to achieving sustainable growth and protecting stakeholder value. Accordingly, it has established a robust risk management framework to identify, assess, monitor, and mitigate risks that could impact its strategic objectives and business operations.

The Companys risk management approach is embedded across all business functions and is supported by strong internal controls, governance practices, and regular oversight by the Board of Directors and its Committees. The framework is periodically reviewed to ensure its continued effectiveness in an evolving business and regulatory environment.

MARKET AND BUSINESS RISK:

The Companys performance is influenced by conditions prevailing in the capital markets, investor sentiment, liquidity, and the level of primary market activity. Fluctuations in interest rates, inflation, geopolitical developments, and global economic conditions may impact fundraising activities and overall market participation. The Company mitigates these risks through business diversification, prudent operational planning, and a client-focused approach.

REGULATORY AND COMPLIANCE RISK:

As a SEBI-registered Category I Merchant Banker, the Company operates within a comprehensive regulatory framework. Changes in laws, regulations, and compliance requirements may affect business operations. The Company maintains a strong compliance culture, supported by well-defined policies, periodic reviews, employee training, and continuous monitoring to ensure adherence to applicable regulatory requirements.

TECHNOLOGY AND CYBERSECURITY RISK:

The increasing reliance on digital platforms and technology exposes financial institutions to cybersecurity threats, data breaches, and operational disruptions. The Company continues to strengthen its information technology infrastructure, cy-bersecurity controls, business continuity arrangements, and data protection measures to safeguard critical information and ensure uninterrupted operations.

OPERATIONAL RISK:

Operational risks may arise from process failures, human error, system disruptions, or external events. The Company has implemented comprehensive internal controls, standard operating procedures, segregation of duties, and periodic internal audits to minimise operational risks and enhance process efficiency.

HUMAN CAPITAL RISK:

The Companys success depends on attracting, developing, and retaining skilled professionals. To address talent-related risks, the Company focuses on employee engagement, continuous learning, leadership development, performance-based rewards, and a positive work environment that encourages innovation and professional growth.

The Company remains committed to proactively managing risks through a strong governance framework, disciplined business practices, and continuous improvement of its risk management processes. This enables the Company to respond effectively to emerging challenges while pursuing sustainable long-term growth opportunities.

RISK MANAGEMENT:

The Board of Directors provides overall oversight of the Companys risk management framework and periodically reviews key strategic, financial, operational, and regulatory risks. The Company has established a structured process to identify, assess, monitor, and mitigate risks that may affect its business objectives. Robust internal controls, well-defined policies, and regular internal audits support effective risk management and regulatory compliance. The Audit Committee periodically reviews the adequacy of internal controls, audit findings, and the implementation of corrective actions. Through continuous monitoring and periodic review, the Company strives to maintain a strong governance framework and effectively manage emerging risks.

KEY RATIO

PARTICULARS	2025-26	2024-25	Change in ratios in %
Current ratio	12.08	10.88	11.0%
Debt- Equity Ratio	0.04	0.04	-4.0%
Debt Service Coverage Ratio	2,762.08	N. A	100.0%
Inventory Turnover Ratio	N. A	N. A	N. A
Return on Equity Ratio	0.13	0.15	-15.5%
Trade Receivable Turnover Ratio	115.95	142.02	-18.4%
Trade Payable Turnover Ratio	146.27	261.02	-44.0%
Net Capital Turnover Ratio	0.70	1.09	-35.3%
Net Profit Ratio	0.44	0.31	42.3%
Return on Capital Employed	0.16	0.16	-1.2%
Return on Investment	0.03	0.03	15.7%

REASONS FOR MORE THAN 25% VARIANCE

PARTICULARS	REASONS FOR VARIANCE
Debt Service Coverage Ratio Trade Receivable Turnover Ratio	Due to finance costs associated with the utilization of the overdraft facility. Decreased due to a simultaneous decline in annual revenue and an increase in the closing trade receivables balance.
Trade Payable Turnover Ratio	The increase in net profit margin, despite lower revenue, was driven by disci- plined cost-reduction measures and enhanced operational efficiency.
Net Capital Turnover Ratio	Decrease due to decline in annual revenue and an increase in working capital
Net Profit Ratio	The increase in net profit margin, despite lower revenue, was driven by disci- plined cost-reduction measures and enhanced operational efficiency.

MATERIAL DEVELOPMENT AT HUMAN RESOURCES:

The Company firmly believes that its employees are its most valuable asset and a key driver of sustainable growth. Their commitment, expertise, and professionalism continue to contribute significantly to the Companys success and its ability to deliver value to clients and stakeholders.

The Company is committed to fostering an inclusive, collaborative, and performance-oriented work culture that encourages innovation, continuous learning, and professional excellence. It provides employees with opportunities for skill enhancement through regular training and development programmes, enabling them to adapt to the evolving business and regulatory environment.

The Company also focuses on talent development, employee engagement, and leadership building to strengthen organisational capabilities and ensure a strong succession pipeline. A merit-based performance management system, supported by fair recognition and growth opportunities, motivates employees to achieve their full potential.

The Company remains committed to providing a safe, healthy, diverse, and respectful workplace that promotes equal opportunity and employee well-being. Cordial industrial relations were maintained throughout the year, and the management appreciates the continued dedication and contribution of its employees in achieving the Companys strategic objectives.

SAFE HARBOUR:

The statements contained in this Annual Report describing the Companys objectives, strategies, future outlook, projected performance, and expectations may constitute forward-looking statements within the meaning of applicable laws and regulations. These statements are based on current assumptions, business plans, and information available to the management as of the date of this Report.

Forward-looking statements are inherently subject to various risks and uncertainties, including changes in economic conditions, regulatory policies, market developments, technological advancements, competitive dynamics, and other factors that may be beyond the Companys control. Consequently, actual performance and results may differ materially from those expressed or implied in these statements.

The Company does not assume any obligation to revise or update any forward-looking statements to reflect subsequent events or circumstances, except to the extent required under applicable statutory or regulatory provisions. Readers are advised to consider these statements in conjunction with the risks and uncertainties discussed elsewhere in this Annual Report.