Dolat Algotech Ltd Management Discussions

Industry Overview

The Indian capital markets continued to remain an important component of the countrys financial ecosystem during FY 2025-26. The securities market continued to be supported by Indias economic growth, increasing financialisation of savings, participation by domestic and institutional investors, development of market infrastructure and continued adoption of technology.

The Indian equity markets experienced periods of volatility during the year, influenced by a combination of domestic and global factors, including developments in global financial markets, interest-rate expectations, geopolitical developments, commodity prices, foreign portfolio investment flows, currency movements and evolving expectations regarding economic growth and corporate earnings. Such factors continued to influence investor sentiment and market liquidity across asset classes.

Technology continued to remain a key enabler of the securities-market ecosystem. The adoption of electronic trading, automated processes, low-latency infrastructure, data analytics and algorithmic trading technologies has contributed to greater efficiency, speed and transparency in market operations. Market participants are increasingly leveraging technology and quantitative tools to improve execution capabilities, manage risks and respond to changing market conditions.

The regulatory framework governing the securities markets continued to evolve with an emphasis on investor protection, market integrity, transparency, risk management and strengthening of market infrastructure. Regulatory and technological developments are expected to continue shaping the operating environment for participants in the Indian securities market.

Market Outlook

The outlook for the Indian capital markets remains supported by Indias long-term economic growth prospects, increasing financialisation, rising digital penetration and expanding participation in financial markets. Continued development of market infrastructure and technology is expected to further enhance the efficiency and accessibility of the securities market.

At the same time, market participants remain exposed to risks arising from global economic conditions, geopolitical developments, interest-rate movements, inflation, commodity-price fluctuations, foreign capital flows and changes in investor sentiment. Consequently, disciplined risk management, robust technology infrastructure and the ability to respond effectively to changing market conditions remain important factors for sustainable performance.

The Company remains focused on leveraging its technology capabilities and algorithmic trading infrastructure to participate efficiently in the evolving market environment while maintaining appropriate risk-management and compliance frameworks.

Review of Financial Performance

Consolidated Basis:

Particulars	FY 2025-26 (\u20b9 Million)	FY 2024-25 (\u20b9 Million)
Revenue from Operations	4,035.77	5,298.97
Total Income	4,036.05	5,299.20
Profit before Interest, Depreciation, Taxation and Exceptional Items	2,276.58	3,477.28
Total Expenses excluding Interest and Depreciation	1,759.47	1,821.93
Depreciation and amortisation expenses	24.61	23.07
Finance costs	432.27	444.77
Profit Before Tax	1,819.70	3,009.44
Tax expense	526.42	848.86
Profit for the Year	1,293.28	2,160.57
Profit attributable to owners of the Company	1,289.19	2,154.41

Standalone Basis:

Particulars	FY 2025-26 (\u20b9 Million)	FY 2024-25 (\u20b9 Million)
Revenue from Operations	3,024.74	4,238.14
Profit before Interest, Depreciation, Taxation and Exceptional Items	2,050.67	3,138.41
Depreciation and amortisation expenses	24.61	23.07
Finance costs	430.63	443.30
Profit Before Tax	1,595.43	2,672.05
Tax expense	306.23	517.63
Profit for the Year	1,289.20	2,154.41
Basic and diluted Earnings Per Share	\u20b9 7.33	\u20b9 12.24

Key Financial Ratios:

Sr. No. Ratio	FY 2026	FY 2025	Variance
1 Current ratio	1.63	5.08	(67.91)
2 Interest Coverage Ratio	4.70	7.03	(33.05)
3 Debt-equity ratio	0.25	0.07	282.62
4 Debt service coverage ratio	4.05	5.91	(31.48)
5 Return on equity ratio	12.09	24.00	(49.65)
6 Return on capital employed	16.32	32.03	(49.05)
7 Net capital turnover ratio	0.79	1.06	(25.60)
8 Operating Profit Margin	67.80	74.05	(8.45)
9 Net profit ratio	42.62	50.83	(16.15)
10 Return on investment - Mutual Fund	5.86	6.95	(15.61)
11 Return on investment - FD	6.85	7.07	(3.11)
12 Return on investment in partnership firm (subsidiary)	58.17	77.11	(24.56)

Current Ratio: The decrease in current ratio is primarily due to significant increase in short-term borrowings and other current financial liabilities during the year, while current assets remained largely stable.

Interest Coverage Ratio: The decrease in Interest Service Coverage Ratio during the year is primarily attributable to decline in profit before tax and consequent reduction in earnings available for debt service, while finance costs remained broadly consistent with the previous year.

Debt-Equity Ratio: The increase in Debt-Equity Ratio during the year is primarily attributable to significant increase in short-term borrowings availed by the Company during the year compared to the previous year.

Debt Service Coverage Ratio: The decrease in Debt Service Coverage Ratio during the year is primarily attributable to decline in profit after tax and consequent reduction in earnings available for debt service, while finance costs remained broadly consistent with the previous year.

Return on Equity and Return on Capital Employed: The decrease in Return on Equity Ratio and Return on Capital Employed Ratio is mainly due to decline in profit after tax and profit before tax during the year, along with increase in shareholders equity and increase in capital employed arising from higher short-term borrowings.

Net Capital Turnover Ratio: The reduction in Net Capital Turnover Ratio is primarily due to reduction in revenue from operations during the year.

Opportunities & Challenges

The Company is primarily engaged in proprietary trading in shares and securities and seeks to identify and capitalise on opportunities arising from developments in the Indian capital markets. The Company follows a prudent and disciplined approach towards its trading activities and endeavours to take advantage of opportunities arising from changing market conditions and market movements.

The Indian capital markets continue to present opportunities arising from economic growth, increasing market participation, evolving market dynamics and developments across various sectors. At the same time, volatility in the capital markets, changes in interest rates, liquidity conditions, domestic and global economic developments and investor sentiment may significantly influence trading opportunities.

Going forward, the Company will continue to evaluate trading opportunities across sectors and market strategies based on prevailing market conditions, available liquidity, risk-return considerations and the managements assessment of market trends. The volatility inherent in the capital markets represents both an opportunity and a challenge for the Company.

Risk & Concerns

The Companys business is inherently exposed to the risks and uncertainties associated with the capital markets. It may be affected by domestic and global economic conditions, market volatility, interest rate movements, liquidity conditions, inflation, changes in government policies and regulations, taxation policies, geopolitical developments and overall market sentiment.

Global developments, including geopolitical tensions, fluctuations in commodity prices, changes in international financial markets and movements in foreign capital flows, may also have an impact on the Indian capital markets and, consequently, on the Companys business. Significant or prolonged adverse movements in the markets may adversely affect the Companys performance.

The regulatory framework governing the securities and capital markets is also subject to periodic changes. The Company continuously monitors applicable regulatory and market developments and endeavours to ensure compliance with the requirements applicable to its business. While the Company seeks to identify and manage risks associated with its trading activities, certain market and external risks remain beyond its control.

INTERNAL CONTROL SYSTEM

The Company has an adequate system of internal controls commensurate with the nature, size and complexity of its business. The internal control framework is designed to ensure proper recording of transactions, safeguarding of assets, reliability of financial information, operational efficiency and compliance with applicable laws, rules, regulations and internal policies. The Company periodically reviews its internal control systems and processes to ensure their continued effectiveness and adequacy and to facilitate adherence to applicable statutory, regulatory and other compliance requirements.

HUMAN RESOURCES

The Company recognises the importance of its human resources in supporting its operations and maintaining an effective governance framework. The Company endeavours to maintain competent and responsible personnel with appropriate knowledge and skills relevant to its business activities.

The Company encourages continuous learning, professional development and adherence to ethical and regulatory standards. The management continues to foster an environment based on trust, transparency, accountability and teamwork, with emphasis on operational efficiency and responsible conduct.

CAUTIONARY STATEMENT

Statement in this Management Discussion and analysis describing the Companys objective, projection, estimates and expectations may be forward looking statement within the meaning of applicable laws and regulations. Actual results may vary significantly from the forward-looking statements contained in this document due to various risks and uncertainties. Several factors could make a significant difference to the Companys operations. These include economic conditions, Government regulations and Tax Laws, Political situation, natural calamities etc. over which the Company does not have any direct control.