Gretex Corporate Services Ltd Management Discussions

Gretex Corporate Services Limited Annual Report FY2025-26 Standalone

1. Global Macroeconomic Environment

Financial year 2025-26 closed under the shadow of a significant geopolitical shock. The outbreak of armed conflict in West Asia in late February 2026, escalating from tensions that had persisted across the Middle East since late 2023, triggered a sharp risk-off repositioning across global financial markets in the closing quarter of the fiscal year. The International Monetary Fund (IMF), in its April 2026 World Economic Outlook, revised its global growth forecast down to 3.1% for calendar year 2026 from the 3.4% outturn in 2025, identifying the geopolitical escalation as the primary downside catalyst.

1.1 Energy Prices and Inflation

Critical maritime shipping routes through the Strait of Hormuz and the Red Sea faced disruption risk, driving international energy commodity prices sharply higher. The IMF revised its global headline consumer price inflation baseline upward to 4.4% for 2026 (against the January 2026 estimate of 3.8%), with energy commodity prices projected to rise approximately 19% over the year. These supply-side pressures reintroduced inflationary headwinds that most major central banks had only recently appeared to be containing.

1.2 Financial Conditions and Global Capital Markets

The geopolitical shock coincided with a period in which major central banks, particularly the US Federal Reserve, maintained a cautious stance on policy rate reductions. Developed market bond yields remained elevated, the US Dollar strengthened materially, and global equity markets experienced pronounced volatility. Investor risk appetite contracted broadly, with institutional capital rotating toward safe-haven assets and reducing exposure to emerging markets. Foreign capital outflows from India, already underway since late 2025, intensified significantly in Q4

FY2026.

2. Indian Economy

Against the challenging global backdrop, India sustained its position as the worlds fastest-growing major economy. Full-year GDP growth is estimated at approximately 7.4% for

FY2026, underpinned by resilient domestic consumption, sustained government capital expenditure, and a recovering manufacturing base. Retail inflation printed at 3.4% in March 2026, broadly within the Reserve Bank of Indias (RBI) target band, and the RBI initiated a calibrated monetary easing cycle with a 25 basis point reduction in the benchmark repo rate. The World

Bank projects Indias GDP growth at 6.6% for FY2027, reflecting a moderating but structurally robust trajectory.

2.1 Currency and Foreign Capital

The Indian Rupee depreciated materially over FY2026, reaching a low of approximately 96.95 per US Dollar before closing March 2026 at approximately 94.83. This weakening compressed

Dollar-denominated returns for Foreign Portfolio Investors (FPIs), accelerating the incentive for outflows. FII net selling of Indian equities through FY2026 exceeded 1,67,000 crores. In CY2026, FII offloading has already surpassed 2,50,000 crores and is placing sustained downward pressure on domestic equity prices.

2.2 Indian Equity Markets

The Nifty 50 declined approximately 16% on a year-on-year basis by the close of FY2026. Broader mid-cap and small-cap indices experienced steeper corrections. The India 10-year benchmark bond yield climbed to 7.04% by March 2026, the highest since July 2024. Domestic institutional investors, principally mutual funds sustained by retail SIP flows exceeding 24,000 crores per month, provided meaningful support but were unable to fully absorb the scale and velocity of FII selling through the second half of the fiscal year.

3. Indian Capital Markets and the Primary Market Landscape

3.1 FY2026 Primary Market: Record Aggregate, Divergent Conditions

Despite equity market turbulence in H2 FY2026, Indias primary market delivered historically significant aggregate fundraising. Total capital mobilised across public equity and corporate debt markets is estimated at approximately 13,92,349 crores. Within the public equity segment, 109 Mainboard IPOs raised 1,77,029 crores, while the SME platforms (SME platform of BSE and NSE Emerge) recorded 257 public issues raising 11,588 crores: an all-time high for the SME segment in both issue count and aggregate capital raised. The preponderance of this activity was concentrated in the first three quarters of the fiscal year; Q4 witnessed a near-complete closure of the IPO window.

3.2 SME Capital Markets: Structural Strength, Cyclical Test

The SME capital market demonstrated exceptional vitality for the first three quarters of FY2026, with a record pipeline of listing-aspirant companies engaging Lead Managers. However, SME listing-day returns, which had averaged over 60% in FY2024, compressed sharply to single digits by Q3 FY2026, reflecting a more discerning investor base recalibrating toward fundamentals after a period of elevated speculative interest. Oversubscription multiples normalised significantly, and secondary market performance of recently listed SMEs came under pressure as broader market sentiment deteriorated.

SEBIs enhanced regulatory framework for SME IPOs, including mandatory operating profit requirements for issuers, stronger due diligence obligations for Lead Managers, and tighter disclosure standards, has introduced additional discipline into the ecosystem. While near-term deal flow moderated, these reforms are structurally positive: they raise the quality floor for listed SMEs and create a meaningful competitive moat around established, compliant merchant bankers with proven execution credentials.

3.3 Q4 FY2026: The Market Freeze and Its Implications for GCSL

The most consequential market development for GCSLs business in FY2026 was the near-complete closure of the primary market window in Q4. The simultaneous occurrence of: (a) the West Asia conflict escalation and the associated global risk-off environment; (b) sustained FII outflows exceeding 2.2 lakh crores through FY2026; (c) sharp corrections in the Nifty 50 and broader equity indices; and (d) Rupee depreciation to multi-year lows, created conditions in which investor appetite for new IPO listings contracted to a near standstill. Issuers with valid exchange approvals deferred their offerings rather than risk weak subscription or adverse post-listing performance.

In direct recognition of this extraordinary market stress, SEBI proactively extended IPO offer validity deadlines for affected issuers to September 30, 2026, a significant regulatory accommodation that provided critical breathing room to companies whose approvals would otherwise have lapsed. For GCSL, as at March 31, 2026, 4 mandates for which in-principal exchange approvals had been obtained, and on which substantial preparatory and documentation work had been completed, could not be brought to market within the fiscal year. These represent deferred, not foregone, revenues.

3.4 Merchant Banking Industry Structure

Indias merchant banking ecosystem is consolidating around a smaller number of established, well-capitalised players. SEBIs progressive tightening of the regulatory framework has raised the compliance burden for smaller or lightly capitalised registered merchant bankers, creating natural exit pressure from the lower tier of the market. Established firms with demonstrated execution capability, clean regulatory track records, and access to quality deal flow are positioned to capture a disproportionate share of a market that continues to grow in aggregate. Pure-play listed investment banks in India, including DAM Capital Advisors and JM Financial, have demonstrated that the merchant banking model can sustain net profit margins exceeding

40% of operating revenues even in mixed-cycle market conditions.

4. Company Overview

Gretex Corporate Services Limited (GCSL or the Company) is a SEBI-registered Category I Merchant Banker, listed on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) mainboards. Headquartered in Mumbai with a presence in Kolkata, GCSL specialises in capital markets advisory and transaction execution, with particular depth in the SME IPO segment on the SME platform of BSE and NSE Emerge platforms.

GCSLs balance sheet carries strategic equity investments in Gretex Share Broking Limited (material subsidiary) and Gretex Industries Limited (associate, listed on NSE Emerge), together with a portfolio of Alternative Investment Fund units, quoted equity, and mutual fund investments, reflecting the Companys positioning as a financial services holding entity within the Gretex Group.

4.1 Cumulative IPO Portfolio: A Decade of Capital Markets Execution

Since its first SME IPO mandate in FY2017, GCSL has built a portfolio of 62 completed transactions, mobilising approximately 1,530 crores in aggregate capital for Indian SMEs across SME platform of BSE and NSE Emerge platforms. This track record spans 10 fiscal years and covers a diverse range of sectors. A defining characteristic of GCSLs portfolio evolution is the consistent scaling of transaction size: the average issue size has grown from 5.26 crores in FY2017 to 45.03 crores in FY2026, representing an approximately 8.5-fold increase over the decade.

4.2 Portfolio Sector Diversity

GCSLs 62-transaction portfolio spans more than 40 distinct sectors, reflecting deep and broad origination capability that transcends industry specialisation. The sector distribution below illustrates the portfolio breadth, with Industrial Products, Pharmaceuticals, Castings & Forgings, and Jewellery Manufacturing among the most represented sectors.

4.3 FY2026: 11 Mandates Executed Across 11 Sectors

In FY2026, GCSL successfully managed and completed 11 SME IPO transactions, spanning an exceptionally diverse range of sectors, reflecting the Companys all-sector origination capability.

Total capital mobilised across these 11 transactions was approximately 495 crores, representing the Companys highest single-year fundraising volume on record.

Issuer	Sector	Issue Size ( Cr)	Overall Subscription	Listing Gain
Retaggio Industries Limited (SME PLATFORM OF BSE)	Jewellery Manufacturing	15.49	1.75x	0.4%
Moving Media Entertainment Limited	Diversi ed Comm.	43.40	50.51x	1.4%
(NSE)	Services
Silky Overseas Limited (NSE)	Tex les	30.68	132.06x	6.2%
Sellowrap Industries Limited (NSE)	Auto Components	30.28	61.33x	8.4%
ARC Insulati on & Insulators Limited (NSE)	Industrial Products	41.19	17.36x	16.0%
Taurian MPS Limited (NSE)	Industrial Products	42.53	9.92x	22.8%
M P K Steels (I) Limited (SME
	Iron & Steel	25.74	1.51x	1.3%
PLATFORM OF BSE)
Munish Forge Limited (NSE)	Castings & Forgings	73.92	3.35x	9.4%
Flywings Simulator Training Centre	Aviation Training	57.05	1.61x	2.1%
Limited (NSE)	Infrastructure
Brandman Retail Limited (NSE)	Distribution & Retail	86.09	106.03x	4.0%
Acetech E-Commerce Limited (NSE) Total / FY2026 Average	E-Commerce & Retail 11 Sectors	48.95 495 Cr avg 45 Cr	1.13x 35.1x avg	n/a 7.2% avg

The charts below detail FY2026 transaction performance across subscription and listing premium dimensions:

5 of the 11 FY2026 transactions achieved overall subscription in excess of 10 times, with Silky

Overseas recording the highest subscription in the cohort at 132.06 times. Taurian MPS delivered the strongest listing performance at 22.81% premium on listing day; ARC Insulation listed at a 16.0% premium; and Munish Forge at 9.4%. In addition, as at March 31, 2026, GCSL held in-principal exchange approvals for 4 further transactions that could not be brought to market due to the Q4 market freeze; these are expected to execute in FY2027 under SEBIs extended validity framework.

4.4 Subscription Analytics: Size Band and Historical Trend

An important structural insight from GCSLs portfolio is the relationship between IPO size and investor demand. The analysis of 62 transactions reveals that the 25 to 50 crores issue size band has historically generated the highest average subscription multiples, reflecting an optimal balance between deal accessibility and institutional attractiveness.

The year-wise subscription trend chart highlights FY2025 as the peak year for investor appetite

(138.5x average), followed by a normalisation to 35.1x in FY2026 as the broader market corrected. Despite this moderation, five FY2026 transactions exceeded 10x subscription and two exceeded 100x, underscoring continued strong demand for quality issuers.

4.5 FY2026 Financial Highlights at a Glance

Particulars		FY2026 ( Lakhs)	FY2025 ( Lakhs)	Change
Revenue from Operati ons		3,309.65	2,069.80	+59.9%
Other Income *		57.41	1,366.91	-95.8%
Total Income		3,367.06	3,436.71	-2.0%
Employee Bene t Expenses		607.55	747.78	-18.7%
Other Expenses		666.18	1,061.75	-37.3%
Finance Costs		32.33	25.46	+27.0%
Depreciation and Amortisati on		113.99	118.62	-3.9%
EBIT		1,979.33	1,508.56	+31.2%
Pro t Before Tax (PBT)		1,947.00	1,483.10	+31.3%
Pro t After Tax (PAT)		1,299.59	1,249.46 for	+4.0%
Other Comprehensive Income (net)		3,550.71 .1x	6,258.94 the	-43.3%
Total Comprehensive Income five	4,850.29 transactions	7,508.40 10x	-35.4%
two Total Shareholders Equity exceeded 100x, underscoring continued strong 22,015.46 demand for quality 14,884.09 issuers.	+47.9%
4.5 Total Borrowings FY2026 Financial Highlights at a Glance	18.39	450.31	-95.9%
Basic Earnings Per Share (Rs.)		5.53	5.55	-0.4%
Operati ng Cash Flow		1,265.11	31.20	N/M

* FY2025 Other Income included 1,287.05 Lakhs of non-recurring profit on sale of investments. Excluding this one-time item, FY2026 represents a materially stronger operating performance on a like-for-like basis.

EBIT = Profit Before Tax + Finance Costs. All figures are Standalone, in Indian Rupees (Lakhs).

5. Opportunities and Threats

5.1 Opportunities

Indias SME ecosystem encompasses thousands of profitable, scalable businesses yet to access public capital markets. With SEBIs progressive development of the SME listing framework and growing promoter awareness of the strategic and valuation benefits of listing, the addressable deal pipeline for established Lead Managers of GCSLs calibre remains large and structurally growing. Indias nominal GDP is projected to cross USD 5 trillion by FY2027, continually expanding the universe of listing-ready companies.

GCSLs growing track record, encompassing 11 IPOs completed in FY2026 alone and a cumulative portfolio of 62 transactions mobilising over 1,530 crores since FY2017, positions it to attract progressively larger and higher-value mandates, including mid-market mainboard transactions and adjacent capital market products. The Companys Category I registration and existing regulatory infrastructure provide the institutional platform for this expansion.

5.2 Threats

The primary market is intrinsically cyclical and GCSLs revenues are directly sensitive to market conditions. As demonstrated in Q4 FY2026, geopolitical events, FII outflows, or equity market corrections can rapidly close the IPO window. Fee compression driven by competition from a growing number of registered merchant bankers presents a persistent margin headwind. SEBIs heightened scrutiny of both SME issuers and Lead Managers increases compliance obligations and potential regulatory exposure. Concentration of the investment portfolio in Gretex Group entities exposes Total Comprehensive Income to mark-to-market volatility.

6. Segment-wise Performance

GCSL operates as a single reportable segment: Merchant Banking and Financial Advisory Services. All revenue from operations is derived from service charges related to capital market transactions, principally IPO lead management on the SME platform of BSE and NSE Emerge platforms. The Company does not maintain separately reportable business segments under Ind

AS 108 (Operating Segments). All financial disclosures herein reflect the Companys performance as a unified operating entity on a standalone basis.

7. Financial Performance

7.1 Revenue from Operations

GCSL recorded Revenue from Operations of 3,309.65 Lakhs in FY2026, representing growth of 59.9% over 2,069.80 Lakhs in FY2025. This growth was driven entirely by organic expansion in merchant banking fee income, anchored by the successful completion of 11 SME IPO mandates during the year. Service charges received (gross) aggregated 3,548.35 Lakhs; the net revenue reflects accrual-basis recognition including unbilled revenue, with 93.75 Lakhs in contracts substantially completed but not yet invoiced at year-end. This growth was achieved despite the

Q4 market freeze which prevented execution of 4 additional approved mandates.

7.2 Other Income

Other Income was 57.41 Lakhs in FY2026 (FY2025: 1,366.91 Lakhs). This decline does not reflect any deterioration in operating quality. FY2025 Other Income was significantly elevated by a non-recurring item: 1,287.05 Lakhs of profit on sale of investments. Excluding this item, FY2025 Other Income was approximately 79.86 Lakhs, broadly comparable to FY2026. Current year Other Income comprises primarily interest on loans extended to Gretex Share Broking

Limited ( 45.33 Lakhs), interest on security deposits ( 2.21 Lakhs), liabilities written off ( 6.97

Lakhs), and miscellaneous items.

7.3 Operating Costs

Total expenses declined 27.3% to 1,420.05 Lakhs (FY2025: 1,953.61 Lakhs), even as operating revenues grew 59.9%, demonstrating substantial operating leverage. Employee benefit expenses declined 18.7% to 607.55 Lakhs (FY2025: 747.78 Lakhs). Expressed as a percentage of operating revenue, employee costs improved from 36.1% in FY2025 to 18.4% in FY2026, a 1,770 basis point improvement. Revenue generated per rupee of employee cost improved from 2.77 in FY2025 to 5.45 in FY2026. Other expenses declined 37.3% to 666.18 Lakhs (FY2025: 1,061.75 Lakhs), representing 20.1% of FY2026 operating revenue (FY2025: 51.3%).

7.4 Profitability

EBIT expanded 31.2% to 1,979.33 Lakhs (FY2025: 1,508.56 Lakhs). Profit Before Tax grew 31.3% to 1,947.00 Lakhs (FY2025: 1,483.10 Lakhs). Total tax expense was 647.42 Lakhs, reflecting an effective tax rate of 33.3% in FY2026, consistent with applicable standard rates. The FY2025 effective rate of 15.75% was held down by the tax-advantaged treatment of long-term capital gains on the investment sale; this rate differential fully explains the divergence in PAT growth (4.0%) relative to PBT growth (31.3%). On a tax-normalised comparable basis, FY2026 PAT of 1,299.59 Lakhs represents growth of approximately 31.4% over the adjusted FY2025 baseline of approximately 988.85 Lakhs.

Other Comprehensive Income (OCI) of 3,550.71 Lakhs (net of deferred tax of 1,640.63 Lakhs) represents fair value appreciation on the Companys equity investments carried at FVTOCI, principally the investment in Gretex Share Broking Limited (valued at 16,167.91 Lakhs) and

Gretex Industries Limited. This OCI is a non-cash, mark-to-market accretion and does not flow through the Profit and Loss Account. Total Comprehensive Income for FY2026 was 4,850.29

7.5 Balance Sheet

Parti culars	FY2026 ( Lakhs)	FY2025 ( Lakhs)	Change
Total Shareholders Equity	22,015.46	14,884.09	+47.9%
Share Capital	2,415.93	1,191.55	+102.8%
Reserves and Surplus	19,599.53	13,692.54	+43.1%
Total Borrowings	18.39	450.31	-95.9%
Non-Current Investments	21,106.95	12,893.70	+63.7%
Current Assets (Total)	2,099.33	1,521.26	+38.0%
of which: Trade Receivables	403.46	447.80	-9.9%
of which: Cash and Cash Equivalents	32.11	507.25	-93.7%
Current Liabilities (Total)	619.20	677.32	-8.6%

Total shareholders equity expanded 47.9% to 22,015.46 Lakhs, driven by conversion of share warrants (issuance of 8,00,000 new equity shares upon conversion of warrants), a bonus issue (issuance of 1,07,23,802 new equity shares), receipt of 2,349 Lakhs in fresh warrant subscription monies, and retention of FY2026 earnings. Notwithstanding substantial dilution,

Basic EPS remained nearly stable at 5.53 (FY2025: 5.55). The Company repaid substantially all short-term borrowings; GCSL is effectively debt-free as of March 31, 2026. Non-current investments grew 63.7% to 21,106.95 Lakhs, reflecting fair value appreciation and fresh investments in AIFs and quoted equity aggregating approximately 3,006.63 Lakhs.

7.6 Cash Flows

Operating cash inflow improved substantially to 1,265.11 Lakhs in FY2026 (FY2025: 31.20

Lakhs), reflecting higher operating profit, normalisation of working capital, and tighter trade receivable management. Net cash used in investing activities was 3,502.61 Lakhs, comprising primarily purchases of non-current investments ( 3,006.63 Lakhs) and an intercompany loan to Gretex Share Broking Limited ( 1,043.30 Lakhs). Net cash from financing activities was 1,762.37 Lakhs, comprising primarily fresh warrant subscription proceeds ( 2,349 Lakhs), offset by debt repayment, lease payments, dividends, and finance costs.

8. Key Financial Ratios

Disclosures pursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Schedule V, Part B.

Section A: SEBI LODR Mandated Ratios

Ratio	FY2026	FY2025	% Change	cant Deviati on (where applicable) Remarks on Signi
Debtors Turnover Rati o	7.77x	6.24x		Improved collection e ciency; debtor days reduced by approximately 12 days on a 59.9% higher revenue base.
(Revenue / Avg. Trade Receivables)	( 47 days)	( 59 days)	+24.5%	Variance is below the 25% mandatory explanation threshold. nancial services
Inventory Turnover Rati o	N/A	N/A	N/A	Not applicable; GCSL is a pure company with no physical inventory. ectively debt-
Interest Coverage Rati o (EBIT / Finance Costs) Current Ratio	61.22x	59.25x	+3.3%	Robust and stable. The Company is e free; nance costs relate primarily to lease liability servicing. Signi cant increase. Short -term borrowings fully repaid
(Current Assets / Current	3.39x	2.25x	+50.7%	in FY2026, reducing current liabilities by 8.6%. Current
Liabiliti es)				assets expanded 38.0% on higher operati ng ac tivity.
				Signi cant improvement. Short -term borrowings
Debt-Equity Rati o (Total Debt / Shareholders Equity)	0.001x	0.030x	-97.2%	(FY2025: 450.31 Lakhs) substantially repaid during the year; the Company is virtually debt-free as at March 31, 2026. Equity base expanded 47.9% concurrently via warrant conversions.
Operati ng Pro t Margin				Below the 25% mandatory explanati on threshold. Note:
(EBIT / Revenue from Operations) Net Pro t Margin	59.8%	72.9%	-18.0%	FY2025 EBIT included 1,287.05 Lakhs of non-recurring investment sale gains. Excluding this item, the core operati ng margin improved materially in FY2026. Decline exceeds 25% threshold. FY2025 PAT was signi cantly elevated by 1,287.05 Lakhs of one-time pro t on sale of investments taxed at a favourable
				e ective rate of approximately 15.75%. Excluding this
(PAT / Revenue from Operations)	39.3%	60.4%	-34.9%	non-recurring item and applying normalised tax rates, the underlying net pro t margin improved substantially in FY2026, re ecting genuine gains from 59.9% revenue growth and sharp cost e ciencies.
Return on Net Worth				Decline exceeds 25% threshold, driven by two concurrent e ects: (i) equity base expanded 47.9% via warrant conversions and bonus issue during FY2026, ahead of earnings accreti on on the enlarged capital
	5.90%	8.39%	-29.7%
(PAT / Shareholders Equity)				base; and (ii) FY2025 PAT was elevated by non-recurring
				investment gains. On a tax-normalised, equity-adjusted
				comparable basis, the operating return trend is
				improving.

Section B: Supplementary Performance Ratios

Rati o / Metric	FY2026	FY2025	Change	Remarks
Operating EBITDA *	2,035.92	260.27	+681.8%	Demonstrates exceptional xed-cost leverage as revenues scaled 59.9%. Employee costs as % of revenue
	Lakhs	Lakhs		improved from 36.1% to 18.4%; other expenses from 51.3% to 20.1%.
Operating EBITDA Margin	61.5%	12.6%	+48.9 pp	Improvement of 4,890 basis points year-on-year. onal improvement driven by higher
DSCR (EBITDA / Total Debt Service)	40.13x	0.55x	N/M	opera Transforma ting EBITDA and near-elimina ti tion of debt obligations.
ROCE	8.99%	10.13%	-11.2%	Moderate decline. Equity base grew 47.9% via warrant conversions; core operating performance improved but
(EBIT / Shareholders Equity)				capital base outpaced near-term earnings accretion. Re ects exceptional producti vity gains as revenue
Revenue per of Employee Cost	5.45	2.77	+96.7%	scaled while employee costs declined. Decline attributable to lower OCI ( 3,550.71 Lakhs vs
Total Comprehensive Income	4,850.29 Lakhs	7,508.40 Lakhs	-35.4%	6,258.94 Lakhs); PAT itself grew 4.0%. OCI represents
				non-cash fair value apprecia on on investments.

9. Risks and Concerns

9.1 Primary Market Cyclicality

GCSLs revenues are directly linked to the volume, pace, and market receptivity of capital market transactions. Geopolitical events, equity market corrections, sustained FII outflows, or adverse regulatory developments can rapidly constrict the primary market window, as demonstrated in

Q4 FY2026 when 4 near-ready mandates could not be executed. The Company manages this risk through maintaining a pipeline of mandates at multiple readiness stages so that market windows can be utilised efficiently when they open.

9.2 Regulatory Risk

SEBIs ongoing tightening of the SME IPO regulatory framework increases compliance obligations. Any inadvertent non-compliance in a managed transaction could attract regulatory sanctions, reputational damage, and in an extreme scenario, adverse action on the Companys SEBI registration. GCSL manages this risk through robust internal due diligence frameworks, dedicated compliance personnel, and proactive engagement with regulatory guidance.

9.3 Concentration and Portfolio Risk

A substantial portion of GCSLs revenue is derived from a relatively small number of large IPO mandates in any given year. The loss or deferral of a significant mandate can have a disproportionate impact on annual revenues. The Companys investment portfolio is concentrated in Gretex Group entities whose valuations are exposed to equity market conditions; adverse movements would affect Total Comprehensive Income through OCI, though this does not impact reported PAT.

9.4 Competitive Pressure and Fee Compression

The merchant banking segment has attracted an increasing number of registered intermediaries competing aggressively on fee pricing, particularly at the lower end of the SME IPO market. Larger, better-capitalised investment banks increasingly compete in the SME segment as mainboard deal activity moderates. GCSL mitigates this through differentiated execution quality, sector depth, and deep relationships with issuers and investors.

9.5 Talent Retention

Merchant banking is a relationship-intensive business; client mandates are often personally associated with senior deal professionals. The departure of key relationship managers or deal leads could result in client attrition and execution capacity constraints. The Company manages this risk through competitive compensation, structured career development pathways, and an inclusive professional culture.

9.6 Post-listing Performance Risk

The secondary market performance of GCSL-managed IPOs directly affects the Companys reputation with investors and issuers. A cluster of poor post-listing outcomes would reduce GCSLs credibility with the investor community and attract heightened regulatory scrutiny. The Company applies rigorous valuation discipline and selectivity in mandate origination to manage this risk.

10. Internal Control Systems and Their Adequacy

GCSL maintains a system of internal financial controls commensurate with the nature and scale of its operations. The Board of Directors, through its Audit Committee, exercises oversight of the design and operating effectiveness of the Companys internal control framework. The Companys statutory auditors, Jay Gupta and Associates (FRN: 329001E) and V. Singhi and Associates (FRN: 311017E), provide independent assurance on the effectiveness of internal financial controls pursuant to Section 143(3)(i) of the Companies Act, 2013.

The internal control framework covers: transaction origination, due diligence, and mandate execution processes; revenue recognition and billing controls; regulatory compliance monitoring across applicable SEBI regulations; treasury and investment management controls; intercompany transaction controls; and HR, payroll, and statutory compliance. The Audit Committee reviews the internal control environment periodically. The statutory auditors have not reported any material weakness in the Companys internal financial controls for FY2025-26.

11. Outlook

GCSL enters FY2026-27 with a tangible near-term pipeline and a robust strategic foundation, positioned to execute across multiple dimensions of the capital markets advisory spectrum.

11.1 Deferred Mandates and Near-Term Revenue Visibility

The 4 in-principal approved mandates deferred from Q4 FY2026, representing substantially completed preparatory work awaiting a market window, provide immediate revenue visibility that is distinct from new business development efforts. Management is cautiously optimistic that the primary market will recover in H1 FY2027 as global risk conditions normalise and domestic equity market sentiment stabilises, allowing these mandates to execute on a timely basis.

11.2 Mainboard Aspirations: Two DRHP Filings in FY2027

A defining strategic milestone for FY2026-27 is GCSLs entry into the mainboard IPO segment.

The Company is in advanced preparation for at least two Draft Red Herring Prospectus (DRHP) filings during the year: one for a steel manufacturing company and one for a company operating in electrical compliance and plastic injection moulding. These proposed mainboard transactions represent a significant step-up in GCSLs mandate profile, both in terms of issue size and regulatory complexity, and reflect the Companys progression along the capital markets value chain after nearly a decade of deep SME execution experience.If successfully executed, these transactions would enhance GCSLs credibility as a mainboard Lead Manager and set precedence for a meaningfully larger mandate pipeline in the medium term.

11.3 SME IPO Target: Up to 10 Transactions in FY2027

Continuing its strength in the SME segment, GCSL targets the underwriting of up to 10 SME IPO transactions in FY2027. This target, combined with the 4 deferred mandates from FY2026, represents a robust and well-advanced pipeline of execution-ready transactions. The Companys origination engine across manufacturing, services, and technology sectors continues to generate quality deal flow, and management believes the underlying demand from listing-aspirant SMEs remains strong, with investor sentiment expected to recover as market conditions normalise through the year.

11.4 Private Equity Sell-Side Advisory: A New Revenue Vertical

In FY2027, GCSL is formally expanding into Private Equity sell-side advisory, targeting the consumer and industrial sectors. This initiative leverages the Companys existing investor base, which has demonstrated a clear appetite for consumer and industrial sector investments, and its deep understanding of business fundamentals and valuation frameworks developed through years of IPO transaction advisory. PE sell-side mandates typically involve advising promoters and PE investors on stake sales or secondary transactions to institutional buyers, and represent a natural adjacency to GCSLs existing capital markets and investor relationship infrastructure. This new vertical is expected to contribute meaningfully to revenue diversification, reducing the Companys dependence on the inherently cyclical IPO calendar.

11.5 Strategic Foundation

The Companys balance sheet, virtually debt-free with 22,015.46 Lakhs in equity and a growing investment portfolio, provides significant financial flexibility to invest in the capabilities, talent, and infrastructure required to pursue this broader mandate. The Companys management is cognisant of the external headwinds, including geopolitical uncertainty, potential market volatility, and an evolving regulatory environment, but is confident in GCSLs ability to navigate these conditions on the strength of its proven execution track record, the depth of its issuer and investor relationships, and the quality and commitment of its team

12. Human Resources and Industrial Relations

GCSLs team of professionals across its Mumbai and Kolkata offices represents the Companys most critical operational asset. In a business where institutional credibility, transactional expertise, and investor relationships are the primary competitive differentiators, the quality, integrity, and dedication of the Companys people directly determine its ability to originate, execute, and close capital market transactions.

Employee benefit expenses were 607.55 Lakhs in FY2026 (FY2025: 747.78 Lakhs). Revenue generated per rupee of employee cost improved from 2.77 in FY2025 to 5.45 in FY2026, reflecting a step-change in workforce productivity as the revenue base scaled on an optimised cost structure. Industrial relations remained harmonious and constructive throughout FY2026. There were no labour disputes, work stoppages, or industrial relations incidents during the year.