Dam Capital Advisors Ltd Management Discussions

Global Economy

Global growth was steady but subdued in CY 2025, navigating a emerging economies. Global output expanded by 3.3% in FY25, complex landscape shaped by geopolitical tensions, evolving trade remaining below the pre-pandemic average growth rate of 3.7%. policies and persistent financial market uncertainties. Against this According to the International Monetary Fund (IMF), global growth backdrop, global economic expansion remained below its long-term is projected to remain at 3.3% in 2026 before moderating marginally trend, reflecting the uneven pace of recovery across advanced and to 3.2% in 2027.

Global Growth Outlook

The projected moderation is concentrated in the advanced economies, where growth is expected to slow from 1.9% in 2025 to 1.8% by 2027. US growth slowed from 2.8% in 2024 to 2.1% in 2025 and is projected at 2.3% in 2026 and 2.2% in 2027, while the euro area recovered to 1.4% in 2025 from 1.0% a year earlier. Emerging market and developing economies remained the primary engine of global growth at 4.5% in 2025, easing temporarily to 3.8% and continuing to account for the bulk of incremental global output.

Infiation continued to moderate through the year, enabling several central banks to begin easing monetary policy. The disinflation was uneven, with services prices proving stickier than goods and commodity prices remaining sensitive to geopolitical developments. Global headline inflation is projected at 4.7% in 2026 before easing to 3.9% in 2027.

Geopolitical developments remained a defining feature of the year. The wars in Eastern Europe and the Middle East, together with rising trade tensions among major economies, continued to reshape global supply chains and investment decisions. The expansion of tari_ measures, export restrictions on critical technologies and the relocation of manufacturing capacity added to trade costs and heightened uncertainty across markets.

Looking ahead, the IMF expects the global economy to maintain a broadly stable growth trajectory, underpinned by sustained investment in artificial intelligence, advanced technologies and productivity-enhancing innovation. These structural drivers are expected to help offset the headwinds arising from geopolitical tensions and an increasingly fragmented global trading environment. Downside risks remain elevated. Any escalation of the conflict in West Asia, the prolonged Russia-Ukraine war, rising protectionism, elevated sovereign debt and tighter global financial conditions could weaken investor confidence, constrain cross-border capital flows and moderate the pace of global economic growth.

Indian Economy

India remained among the fastest-growing major economies in FY26, holding its momentum even as several advanced economies slowed. Real GDP expanded 7.6% during the year, while nominal GDP rose 8.6%. Growth was broad-based across manufacturing, construction and services, supported by sustained public capital expenditure and a gradual improvement in private sector participation.

repo rate cumulatively to 5.25% and the cash reserve ratio to 3.0%, a move that supported growth while keeping the inflation outlook contained. Fiscal and external balances held through the period, with the Union fiscal deficit below 4.5% of GDP and the current account deficit contained at US$25.2 billion, equivalent to 0.6% of GDP. The banking system carried sound bu_ers into the year end, with public sector banks reporting an aggregate capital adequacy ratio of 16.6%, above the regulatory minimum. The external sector held up through a volatile global environment, with comfortable foreign exchange reserves and steady services exports absorbing swings in cross-border capital flows.

Investment Climate and Policy Environment

Despite a challenging global macroeconomic environment, Indias policy framework and macroeconomic stability continued to support long-term investor confidence. Ongoing reforms, infrastructure investment and sustained improvements in ease of doing business, reinforced the countrys investment appeal even as global capital flows remained volatile.

Structural reforms have played a pivotal role in improving the investment landscape. The Goods and Services Tax (GST) has streamlined the indirect tax regime by creating a uni_ed national market, enhancing transparency and improving tax compliance. Special Economic Zones (SEZs) continue to facilitate export-oriented manufacturing through improved infrastructure and fiscal incentives, while initiatives such as the Production Linked Incentive (PLI) Scheme and Make in India have accelerated investments across sectors.

Indias credit ecosystem is undergoing a structural transformation as the Reserve Bank of India (RBI) adopts a more market-oriented lending framework to support investment, corporate growth and capital market development. Recent regulatory reforms have liberalised lending norms by permitting banks to finance a higher proportion of acquisition transactions, increasing lending limits against shares and expanding IPO financing, while maintaining prudent exposure limits.

The Union Budget 2026-27 reafirmed the Governments commitment to fiscal discipline and long-term economic stability. The Budget introduced targeted capital market reforms, including revisions to the Securities Transaction Tax (STT) on futures and options and the taxation of share buybacks as capital gains, aimed at improving market efficiency and curbing tax arbitrage. To strengthen Indias position as a global digital infrastructure hub, the Government announced an income tax exemption until 2047 for eligible foreign companies providing cloud services through data centre infrastructure located in India, subject to serving Indian customers through domestic resellers. These measures are expected to enhance Indias attractiveness as a global investment destination while supporting sustained economic growth and industrial development.

Infiation

Infiation moderated over the course of the year, helped by easing food prices, improving supply-side conditions and a measured monetary policy stance. Softer price pressures supported household purchasing power and consumption and gave the Reserve Bank of India greater room to ease. Over the year, the RBI reduced the

Outlook FY27

Looking ahead, global geopolitical tensions and shifting trade dynamics will be important factors with respect to commodity prices, energy imports, exchange-rate movements and cross-border capital flows. Indias diversified trade relationships, expanding domestic market and continued supply-chain diversification should remain the bright spot helping the country navigate volatile times.

The RBI expects growth to moderate in FY27, projecting real GDP growth of 6.6%, down from 7.6% in FY26, supported by domestic demand, continued public infrastructure investment, a sound banking sector and a gradual pickup in private investment. Infiation is projected to average 5.1% over the year, above the RBIs earlier estimate of 4.6%, largely on energy prices, LPG and base metal prices; core inflation is projected at 4.7%. The RBI held the repo rate at 5.25% for a second consecutive meeting and kept a neutral stance, preserving flexibility as it monitors inflation, the rupee and global risk conditions.

Indian Capital Markets

Indian corporates mobilised 13,92,349 crore from the capital markets during FY26, comprising 4,50,945 crore in equity issues,

9,11,078 crore in debt issues and 30,326 crore through Real Estate Investment Trusts and Infrastructure Investment Trusts, reflecting the continued use of diverse capital market instruments by corporates to fund expansion, refinance liabilities and support long-term strategic objectives.

Equity Capital Markets

Amid intermittent bouts of global market volatility, Indias equity capital markets remained active, albeit at a more measured pace than the previous year. Mainboard initial public offerings and qualified institutional placements (QIPs), which together constitute the core addressable fee pool for merchant banking franchises, accounted for 141 transactions during the year, compared with 163 in FY25, representing a decline of 13.5% and 22 fewer fee-generating events across the market. Aggregate IPO and QIP issuance volume also declined by approximately 18.2%, from _2,96,000 crore in FY25 to _2,42,000 crore during the year.

Mainboard IPOs collectively raised 1,78,963 crore, underscoring continued investor appetite for quality issuances. However, the average issue size moderated by 23% to approximately 1,598 crore, from 2,082 crore in FY25, reflecting a greater share of mid-sized offerings. The moderation in primary market activity was driven by heightened geopolitical uncertainties and a challenging global macroeconomic environment, which tempered issuer and investor sentiment through parts of the year.

Sector composition was concentrated by value and diversified by volume. Financial services raised 59,822 crore across 12 mainboard listings, more than double the contribution of any other single sector, driven by large non-banking financial companies and asset management companies accessing public markets to fund expansion and meet capital requirements.

By number of issues, capital goods led with 19 offerings, followed by financial services with 12, with services and healthcare contributing 11 each. The distribution indicates that issuance was not concentrated within a single theme and consequently favoured intermediaries maintaining genuine multi-sector coverage.

Composition of Capital Raising

The most significant development during the year was the rotation in instrument mix rather than the aggregate quantum raised. Rights issues reached a multi-year high of 46,168 crore, the highest since the record 64,059 crore mobilised in FY2020-21, assisted by regulatory measures that streamlined and accelerated the rights issue process. Preferential allotments increased by 76% to 1,48,219 crore. Qualified institutional placements moved in the opposite direction, contracting by 50% to 67,853 crore from an elevated base in the preceding year, as market volatility, elevated crude oil prices and softer corporate earnings rendered institutional participation more selective. In the debt market, 9,11,078 crore was raised, approximately 98% of which was through private placement.

Institutional Participation and Market Depth

The structural development in the Indian capital markets during the year concerned the composition of institutional demand and became evident in the closing month of the financial year.

During March 2026, foreign portfolio investors were net sellers of s 1,25,736 crore across asset classes, marking the largest monthly outflow on record. The outflow was driven by a convergence of macroeconomic stress and elevated geopolitical risk. Brent crude prices rose above US$100 per barrel, United States Treasury yields hardened, and the Indian rupee came under significant pressure. During the January-March 2026 quarter, the rupee depreciated sharply from around s 90–91 per US dollar at the beginning of January to breach the psychological s 95 mark by late March, contributing to an annual decline of nearly 10% against the US dollar, its steepest fall in over a decade. The sharp depreciation heightened concerns over imported inflation and external sector stability. Against this backdrop, foreign portfolio investors remained net sellers in every trading session during March.

Supporting overall market liquidity, domestic institutional investors recorded net equity purchases of _1,43,169 crore during the month.

Cumulative net domestic institutional investor inflows reached a record 8.5 lakh crore during FY26, driven by record systematic investment plan contributions. Mutual fund assets under management stood at 73.73 lakh crore as at 31 March 2026, an increase of 12.2% over 65.74 lakh crore a year earlier, with gross mobilisation of 157.5 lakh crore against redemptions of 150.1 lakh crore producing net inflows of 7.4 lakh crore for the year. Assets under management in the portfolio management services (PMS) industry stood at 41.4 lakh crore as at February 2026.

The Alternative Investment Fund (AIF) industry also continued its strong expansion, with cumulative commitments reaching 16.94 lakh crore, funds raised of 7.03 lakh crore and investments of 6.76 lakh crore as at 31 March 2026. Category II AIFs remained the largest segment, accounting for nearly three-fourths of total commitments, highlighting sustained investor appetite for private equity, credit and other long-term alternative investment strategies.

Institutional Equities and Secondary Market Activity

Secondary market conditions deteriorated materially in the closing month of the year. March 2026 recorded the sharpest monthly decline in Indian equities since March 2020, with the Nifty declining 11.3% and the Sensex 11.5%. The correction extended across sectors, although defensive sectors demonstrated greater resilience. The Nifty 50 traded at trailing price-earnings multiple of 20.7 at the close of March 2026, second only to the S&P 500 at 25.5 among major markets.

Turnover data presents a more differentiated position. Average daily turnover in the equity cash segment stood at 1.1 lakh crore for FY26, 8.3% below the 1.2 lakh crore recorded in the preceding year, although March 2026 itself recorded a fiscal-year peak of 1.3 lakh crore, 9% above February 2026. In the equity derivatives segment, average daily turnover in futures increased 9% month-on-month to 1.8 lakh crore in March 2026, while average daily turnover in options measured on premium turnover increased 33% to 1.3 lakh crore, the highest level recorded in two years.

For an institutional equities business, the principal exposure is to the level of market engagement rather than to the direction of market movement. Trading activity was sustained through the correction; the cash-equity commission pool and the corporate access calendar were the elements that contracted. Regulatory measures directed at moderating speculative participation and strengthening investor protection continued to reshape the derivatives segment during the year, requiring broking businesses to balance transaction volumes against compliance, risk management and client suitability obligations. The effect across the industry has been to place greater weight upon research depth, sector coverage and client servicing relative to transaction flow.

Investment Banking and Advisory Services

The Indian investment banking industry continued to develop beyond traditional capital raising during FY26. Customers increasingly sought integrated advice spanning equity capital markets, mergers and acquisitions, structured finance, private placements, strategic advisory and shareholder monetisation.

The domestic advisory market continued to present meaningful opportunities during FY26. During the year, 122 open offers, aggregating 35,185 crore, were completed under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, reflecting transactions involving changes in control or significant acquisitions of listed companies. Since mandatory open offers are triggered only under specified regulatory thresholds, these transactions represent only a portion of the overall mergers and acquisitions activity in the market. The broader advisory opportunity continues to be underpinned by an evolving regulatory framework, improving access to acquisition financing and an expanding pool of private equity investments approaching exit.

Indias standing in global issuance activity reinforces the scale of the domestic opportunity. In March 2026, notwithstanding the disruption prevailing during that month, India held second position globally with a 14% share of initial public offering activity and 20 listings, behind China at 24% and 38 listings, and ahead of the United States at 9% and 6 listings.

The structural conditions supporting the Indian capital markets remain in place. These comprise a substantial pipeline of companies preparing for public listing, improving governance standards, the continued migration of household savings into equities, an expanding base of domestic institutional capital and the ongoing formalisation of Indian business. Issuances will remain subject to market conditions and tend to concentrate within shorter windows during periods of market volatility.

Over a longer horizon, the structural direction favours higher volumes across a wider instrument mix spanning initial public offers, qualified institutional placements, rights issues, block trades, follow-on offerings and strategic equity placements. Institutions maintaining integrated capabilities across advisory, equity capital markets, institutional equities and research are positioned to capture a disproportionate share of the resulting activity.

Corporate Overview

DAM Capital Advisors Limited is an independent, listed pure-play investment bank, among the first of its kind to list in India. The Company provides capital market and strategic advisory services across Equity Capital Markets (ECM), Mergers and Acquisitions (M&A), Private Equity Advisory, Structured Finance and Institutional Equities, serving corporates, financial sponsors, institutional investors and family offices. The Company combines sector coverage with a focus on transaction execution across the full advisory cycle.

The Year in Perspective

During FY26, DAM Capital navigated one of the most challenging capital-market environments in recent years. Escalating geopolitical tensions due to the on-going war in West Asia and the Russia-Ukraine war, uncertainty around global trade and tari_ policies, persistent volatility in equity markets and cautious investor sentiment resulted in a slowdown in primary market activity, particularly during the second half of the year. Across the industry, several fund-raising transactions were deferred as issuers adopted a wait-and-watch approach, while proposed deal sizes were reduced in response to subdued market conditions and valuation considerations.

Total income for FY26 stood at 237 crore, down 5.2% year-on-year, with profit after tax at 73 crore. The moderation was a function of the environment, during a year of global macroeconomic turmoil that compressed deal calendars and institutional flows across the industry.

Despite these external headwinds, the Company continued to strengthen its client franchise, expand its mandate pipeline and maintain healthy execution across both Merchant Banking and Institutional Equities, demonstrating the resilience of its business model.

1. Strengthening Leadership in Capital Markets

While capital market activity remained subdued during parts of FY26 owing to heightened global uncertainty, the Company continued to secure high-quality mandates and concluded the year with a robust pipeline of 25 IPOs, including 13 Left Lead Banker mandates and 6 Sole Banker mandates. The Company is also increasing its focus on advisory-led businesses, which are relatively counter-cyclical and help diversify and expand its fee-income pool. Its strategic focus remains on executing marquee transactions across sectors while maintaining a disciplined approach to mandate selection and execution excellence.

2. Deepening Institutional Equities Franchise

Institutional Equities continues to be a key strategic pillar, enabling the Company to build long-term relationships with domestic and global institutional investors. DAM

Capital continues to invest in strengthening its research capabilities, expanding sector coverage and enhancing corporate access initiatives through conferences, roadshows and thematic engagements. During FY26, the institutional client base expanded to 298 active clients across India and major international markets. These investments reinforce the Companys differentiated research-led franchise and position it to capture greater institutional engagement over the long term.

3. Expanding the National Footprint and Leadership Bench

During the year, the firm strengthened its senior leadership team and established an on-the-ground presence in Gujarat, deliberately widening its origination reach beyond Mumbai and Delhi. Expanding into high-growth entrepreneurial markets remains a priority, bringing the firm closer to the next generation of issuers.

Human Resources

The Company maintains an inclusive and equitable workplace and regards its people as central to its performance. Its culture is built on ownership, collaboration and merit, and it continues to invest in developing its employees.

Employee engagement is a priority, supported by technical, functional and behavioural training. During the year, the Company continued to invest in employee development through structured learning, knowledge sharing and leadership engagement, with an emphasis on building the depth of talent and leadership the business will need as it grows. Equal opportunity, ethical conduct, employee well-being and an inclusive working environment remain integral to its approach.

As at 31 March 2026, the Company employed 130 professionals, with women representing approximately 25% of the total workforce.

Internal Financial Controls

The Company maintains an internal control framework appropriate to the nature, scale and complexity of its operations. The framework is designed to support operational efficiency, safeguard assets, maintain the integrity of financial reporting, ensure compliance with applicable laws and regulations, and support risk management across the organisation.

Internal policies, standard operating procedures and control mechanisms are reviewed periodically and updated to reflect changes in regulatory requirements and business priorities. They are supported by defined governance structures, delegated authority frameworks and continuous monitoring.

An independent internal audit function reviews key business processes, financial controls and operational systems to assess the adequacy and effectiveness of the control environment. Its observations and recommendations are reported to the Audit Committee, which reviews the findings and monitors the implementation of corrective actions.

The Company considers its internal financial controls to be adequate and operating effectively, providing reasonable assurance as to the reliability of financial reporting, the safeguarding of assets, the prevention and detection of fraud and error, and compliance with applicable statutory and regulatory requirements.

Cautionary Statement

The Management Discussion and Analysis section of this report includes several statements that outline the Companys objectives, predictions, and expectations, as well as our assessments of macroeconomic conditions. These statements are considered ‘forward-looking and are based on the current forecasts and assumptions of management.

The actual results may vary from these projections due to a range of uncertainties and factors. These factors include but are not limited to fluctuations in global supply and demand, changes in macroeconomic policies, new regulatory impacts and variations in pricing strategies. The Company does not assume responsibility for any discrepancies between projected and actual outcomes, as these forward-looking statements may be subject to change based on subsequent developments and events.