Escorp Asset Management Ltd Management Discussions

INDUSTRY STRUCTURE AND DEVELOPMENTS:

The Portfolio Management Services (PMS) industry in India is entering a transformative phase, driven by increasingly sophisticated investor participation, a broader and more diverse investment universe, and a regulatory framework that places greater emphasis on transparency, governance, and risk management.

It reflects not only the industrys collective progress but also our shared vision for the future. The resilience demonstrated by the PMS industry amid evolving global economic conditions underscores the strength of the institutional frameworks built by our professional community and the enduring confidence placed in us by our investors.

Overall, Indias capital markets are poised for continued growth and evolution, driven by regulatory reforms, technological advancements, and increasing investor participation. As the market continues to develop, it is essential to stay informed about the latest trends and developments to navigate the landscape effectively.

MARKET GROWTH:

Indias Portfolio Management Services (PMS) industry commenced FY2026 27 on a robust footing, with assets under management (AUM) surpassing 42.2 lakh crore in April 2026, according to the latest Industry Compendium published by the Association of Portfolio Managers in India (APMI).

The industrys AUM increased by 2.1% month-on-month, reflecting sustained investor confidence and healthy participation at the beginning of the new financial year. Net inflows rebounded strongly to 25,088 crore during the month, underscoring renewed investor interest in professionally managed investment solutions.

Domestic investors continued to account for the overwhelming share of industry assets, while both listed and unlisted equity, along with debt strategies, recorded healthy growth, highlighting the breadth and resilience of the PMS investment landscape.

The industry served approximately 2.12 lakh client accounts at the end of April 2026. While the number of accounts witnessed a marginal month-on-month adjustment of 1.7%, the continued growth in AUM reflects higher allocations and sustained confidence among existing investors.

Strong Addition to Investor Base continues.

Indias economic transformation over the past few decades is a narrative of rapid growth and evolving financial landscapes. Central to this story is the rise of capital markets, catalyzing capital formation for the real economy, enhancing the financialization of domestic savings, and enabling wealth creation.

1EVOLVING TRENDS:

April 2026 witnessed a strong recovery in Indian equity markets, with benchmark indices posting robust gains. The BSE Sensex advanced 6.9% and the Nifty 50 gained 7.5% on a month-on-month basis, while broader markets significantly outperformed, with the BSE Midcap and BSE Smallcap indices rising 13.8% and 19.6%, respectively.

Sectoral leadership was driven by Power, Realty, Capital Goods, Infrastructure, and Metals. Foreign Portfolio

Investors (FPIs) remained net sellers during the month, with net outflows of approximately 41,000 crore, while sustained Domestic Institutional Investor (DII) inflows continued to provide stability and support to the markets.

Indias consumer price inflation (CPI) stood at 3.48% year-on-year in April, up marginally by 8 basis points from March. Rural inflation was recorded at 3.74%, while urban inflation stood at 3.16%. Food inflation remained at 4.20%, whereas housing inflation stayed relatively benign at approximately 2.15%. The modest increase in headline inflation was primarily driven by elevated prices of precious metals.

Against this favourable market backdrop, the Portfolio Management Services (PMS) industry expanded to 42.2 lakh crore in assets under management (AUM), registering a 2.1% month-on-month increase. The discretionary PMS segment continued to account for the majority of industry AUM, underscoring investors continued preference for professionally managed discretionary mandates. The industry served approximately 2.12 lakh client accounts during the month, with a modest 1.7% adjustment reflecting the typical normalization seen at the commencement of a new financial year.

Investor sentiment strengthened considerably during April, with net inflows rebounding to 25,088 crore compared with a net outflow of 648 crore in March. Gross inflows increased 27% month-on-month to 46,030 crore, while outflows moderated meaningfully, resulting in a sharp improvement in net fund flows. Across asset classes, equity holdings expanded by 13.8%, plain debt assets grew by 0.8%, and investments in mutual funds increased by 5.4%, while derivatives portfolios witnessed notable repositioning in response to evolving market conditions.

MACRO FUND:

On the macroeconomic front, the Indian economy continues to demonstrate resilience, supported by strong high-frequency indicators, an improved Composite Purchasing Managers Index (PMI) of 58.9, and inflation remaining within the Reserve Bank of Indias target range.

Under the revised GDP series with the base year 2022 23, Indias economy expanded by 7.8% year-on-year in the third quarter of FY 2025 26, compared with 8.4% in the preceding quarter. Growth was led by a robust performance in manufacturing, which recorded its strongest expansion in eight quarters, alongside continued strength in the services sector, which registered its highest growth in seven quarters. On the demand side, both private consumption and investment remained resilient, supported by GST-related tax rationalization, favorable interest rate conditions, and sustained domestic demand. The revised GDP series, which fully captures the post-GST economic structure, reaffirms the underlying strength and resilience of the Indian economy.

Despite persistent global uncertainties, India remains well-positioned to sustain its growth momentum, supported by robust domestic demand, conducive financial conditions, moderate inflation, and manageable external sector balances. The recently announced Union Budget reinforces this outlook by maintaining a credible and stable macroeconomic framework. While continuing its commitment to fiscal prudence, the Government has adopted a calibrated approach, focusing on targeted policy support and productive capital expenditure rather than broad-based fiscal stimulus.

OPPORTUNITIES

The need for superior quality and process execution.

Increasing disposable income and investment in financial products. ?

Acceptance of a new and innovative range of financial products creates an opportunity to innovate in the financial services space. ?

Rise in urban youth awareness about the benefits of investment. ?

Need for leadership in sophisticated solutions to enable our clients to optimize the efficiency of their businesses. ?

Constant upgradation of the technology enables us to emerge as a leader in this fast-paced financial services environment.

Consolidation/acquisitions/restructuring opens out opportunities for the corporate advisory business.

THREATS:

Enhanced competition from both local and global players and the rise of disruptive business models in financial services and the emergence of new technology, the company runs the risk of obsolescence.

A dependence on technology and third-party platforms exposes us to threats posed on the internet, such as virus attacks leading to execution failures and disclosure of client information.

Our business operations have a heavy reliance on technology and servers to execute trades on the exchanges.

This may lead to a threat due to execution risk.

Our business is exposed to macroeconomic changes and operates in a highly regulated industry. Its performance not only depends on a slowdown in global liquidity flows but also on a change in regulatory frameworks.

BUSINESS PERFORMANCE:

1) REVIEW OF OPERATIONS:

The Total Income of the Company stood at 443.74 lacs for the year ended March 31, 2026, as against 1959.74 lacs in the previous year. The Company reported a net profit of 298.13 lacs for the year ended March 31, 2026, compared to a net profit of 1628.40 lacs in the previous year.

2) INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company has established a robust internal control framework commensurate with the nature, scale, and complexity of its operations. The framework is designed to safeguard the Companys assets, ensure operational efficiency, maintain the accuracy and reliability of financial and operational information, and promote compliance with applicable laws, regulations, accounting standards, and internal policies.

Comprehensive policies, standard operating procedures, and clearly defined authority matrices have been implemented across all key business functions. Appropriate approval hierarchies and financial delegation limits are in place to ensure that transactions are authorized, recorded, and executed in accordance with established governance standards.

The effectiveness and adequacy of the internal control environment are continuously monitored through regular management reviews, risk-based internal audits, and periodic assessments. The internal control systems provide reasonable assurance regarding the protection of assets against unauthorized use or loss, the integrity of financial reporting, and adherence to statutory and regulatory requirements.

The Boards Audit Committee, comprising Independent Directors, provides oversight of the Companys internal financial controls and risk management framework. The Committee periodically reviews the scope and findings of internal audits, evaluates the adequacy of existing control mechanisms, and monitors the implementation of corrective and preventive actions. Recommendations for strengthening the control environment are reviewed regularly to ensure that the Companys governance framework remains aligned with evolving business needs and regulatory expectations.

3) RISKS AND CONCERN:

Risk management is integral to the Companys business strategy and long-term value creation. Our objective is to achieve an optimal balance between risk and return while safeguarding stakeholder interests and ensuring sustainable growth.

The financial services industry operates in an increasingly dynamic environment, shaped by evolving regulatory requirements, rapid technological advancements, greater global market integration, and the emergence of increasingly sophisticated financial products and transactions. These developments necessitate a proactive and comprehensive approach to identifying, assessing, and managing risks.

The Company has established a robust risk management framework under which senior management continuously identifies, evaluates, monitors, and mitigates key business, operational, financial, regulatory, and strategic risks. Well-defined processes, internal controls, and monitoring mechanisms enable the early identification of emerging risks and facilitate timely corrective actions. Significant risk events and mitigation measures are reviewed periodically by senior management and, where appropriate, reported to the Board of Directors for its oversight and guidance.

The Company also closely monitors developments in the regulatory landscape. While regulatory reforms continue to strengthen governance and market integrity, it remains important that the regulatory framework promotes a level playing field for all market participants. Through active engagement with industry associations and regulatory authorities, the Company contributes to policy discussions and provides constructive feedback aimed at fostering a balanced, transparent, and competitive operating environment.

4) RISK MANAGEMENT:

The Company follows a structured and enterprise-wide risk management process encompassing four key stages risk identification, assessment, mitigation, and continuous monitoring to ensure the timely identification and effective management of potential risks. The framework is supported by robust internal control systems, periodic internal audits, insurance adequacy reviews, and ongoing compliance monitoring to strengthen the overall governance environment.

The Board of Directors provides oversight of the risk management framework and periodically reviews its effectiveness to ensure that it remains aligned with the Companys strategic objectives, evolving business landscape, and applicable regulatory requirements. The framework is reviewed and updated, as necessary, to address emerging risks, regulatory developments, and industry best practices.

5) KEY RATIOS

PARTICULARS	2025-26	2024-25	Change in ratios in %
Current ratio	44.55	21.7	105.29
Debt- Equity Ratio	0.05	0.06	NA
Debt Service Coverage Ratio	NA	NA	NA
Inventory Turnover Ratio	NA	NA	NA
Debtors Turnover Ratio	50.42	397.46	-87.31
Interest Service Coverage Ratio	NA	NA	NA
Long-term debt to working capital	NA	NA	NA
Bad debts to accounts receivable ratio	NA	NA	NA
Current liability ratio	0.13	0.25	-46.34%
Total debts to total assets		NA	NA
Return on Equity Ratio	0.04	0.28	-84.41%
Trade Payable Turnover Ratio	NA	-	NA
Net Capital Turnover Ratio	0.16	0.94	-82.95%
Net Profit Ratio	0.94	0.89	5.71%
Return on Capital Employed	NA	0.29	NA
Return on Investment	0.05	0.28	-82.83%

REASONS FOR MORE THAN 25% VARIANCE

RATIOS WITH VARIANCE
	REASONS FOR VARIANCE
MORE THAN 25%
Current Ratio	Improved due to a decrease in current liabilities
Debt Service Coverage Ratio	NA
Inventory Turnover Ratio	NA
Debtor Turnover Ratio	Due to contraction in revenue from operations, which resulted in a lower frequency of accounts receivable turnover.
Interest Service Coverage Ratio	NA
Return on Equity Ratio	Due to a contraction in net profit
Trade Payable Turnover Ratio	NA
Net Capital Turnover Ratio	Due to contraction in revenue from operations
Net Profit Ratio	NA
Return on capital employed	NA
Return on Investment	Due to contraction in investment income generation.

6) HUMAN RESOURCES:

Escorp Asset Management Limited believes that its people are its most valuable asset and a key driver of sustainable growth. The Company fosters a dynamic, collaborative, and performance-oriented work environment that encourages innovation, entrepreneurship, accountability, and continuous learning. Guided by its core values of integrity, trust, teamwork, excellence, and client-centricity, the Company is committed to building a culture that empowers individuals to achieve their full potential.

Our diverse workforce brings together professionals with varied skills, experience, and perspectives, enabling the Company to respond effectively to evolving business opportunities and deliver long-term value to clients and stakeholders. The management team and Board of Directors remain committed to nurturing an inclusive workplace that supports professional development, ethical conduct, and high standards of corporate governance.

The Company follows a merit-based approach to talent acquisition, focusing on competence, experience, commitment, cultural alignment, and diversity. We encourage our employees to think and act like owners by fostering a culture of accountability, collaboration, and entrepreneurial thinking. By providing a supportive environment, meaningful opportunities for growth, and the resources required to innovate, the Company enables its people to contribute effectively to organizational success while achieving their own professional aspirations.

7) OUTLOOK:

The Companys strategic initiatives are currently in the early stages of implementation, with FY 2026 27 marking the beginning of its transformation from a traditional brokerage business to a next-generation digital financial services platform. Leveraging its established relationships with fintech companies, banking partners, and other ecosystem participants, the Company aims to expand its digital capabilities, enhance customer engagement, and capitalize on the significant growth opportunities emerging across Indias financial services sector. This strategic transition is expected to strengthen the Companys competitive positioning and support sustainable long-term growth.

8) SAFE HARBOUR:

This document contains forward-looking statements based on the Companys current expectations and assumptions regarding future business performance and developments. Actual results may differ materially due to various risks and uncertainties, including changes in economic conditions, market dynamics, regulations, competition, and other factors beyond the Companys control.

The Company undertakes no obligation to update these statements except as required by applicable law. Readers should refer to the Annual Report FY 2025 26 for further details on the associated risks and assumptions.