HB Portfolio Ltd Management Discussions

1. OPERATING RESULTS Standalone Performance

On a Standalone basis, the Company reported Total Income of Rs. 1,267.45 Lakhs which is lower than previous Financial Years Total Income of Rs. 1,495.93 Lakhs. The Net Profit after tax stood at Rs. 145.11 Lakhs as against Net Loss after tax of Rs 76.98 Lakhs in the previous financial year.

Consolidated Performance

On Consolidated basis, the Company reported Total Income of Rs. 2,712.79 Lakhs which is lower than previous Financial Years Total Income of Rs 2,828.58 Lakhs. Profit after tax stood at Rs. 20.27 Lakhs as against Profit after tax of Rs. 20.64 Lakhs in the previous Financial Year.

2. INDUSTRY STRUCTURE AND DEVELOPMENTS

The global economy is witnessing a gradual slowdown amid ongoing geopolitical conflicts, persistent inflationary pressures and continued trade uncertainty. Rising energy prices and recurring supply-chain disruptions are weighing on business confidence and dampening investment activity across regions. Advanced economies are expected to register subdued growth, with inflation remaining elevated in the near term before gradually stabilising. In a scenario where geopolitical tensions remain contained, global growth is likely to moderate in the year 2026 with a potential gradual recovery in the year 2027, while inflationary pressures may ease after a temporary uptick. Emerging and developing economies are expected to face relatively greater pressure due to weaker external demand and higher inflation risks.

Against this backdrop, India continues to stand out as one of the fastest- growing major economies, supported by strong domestic demand, sustained infrastructure investment, digital expansion, and ongoing manufacturing growth. However, the economy remains exposed to external risks such as volatile crude oil prices, weakening export demand, and geopolitical disruptions, particularly those linked to Middle East tensions. These global developments are also expected to impact Indias commodities market, leading to elevated volatility, with energy and agricultural commodities facing inflation-driven price pressures, while industrial metals may reflect uneven global demand conditions. Financial Year 2026-27 is therefore expected to remain a period of global uncertainty, though India is likely to remain relatively resilient while carefully managing external shocks.

These factors are expected to continue influencing market sentiment, capital flows and investment activity. While short-term volatility may affect trading volumes and asset valuations, the long-term outlook for the capital markets industry remains positive, supported by increasing financialisation of savings, rising retail participation and the sustained expansion and deepening of Indian financial markets.

3. OPPORTUNITIES AND THREATS

India remains one of the strongest-performing major economies, supported by robust domestic demand, infrastructure expansion, a rapidly growing digital economy and a stable banking and financial system. The country is also well positioned to benefit from global supply-chain diversification, as multinational firms increasingly shift production and investment toward alternative manufacturing hubs. Indias large young workforce, expanding technology ecosystem and strong digital public infrastructure further enhance its ability to capture gains from emerging technologies, including artificial intelligence and productivity-driven innovation. In addition, healthy foreign exchange reserves and improved macroeconomic stability continue to strengthen resilience against external shocks.

However, key external risks persist. A rise in global crude oil prices due to geopolitical tensions, particularly in the Middle East, remains a significant threat given Indias high dependence on imported energy. This could intensify inflationary pressures, weaken the rupee and widen both fiscal and current account deficits. A slowdown in global growth and increasing trade fragmentation may also weigh on export demand, including IT services and manufactured goods, while global financial market volatility could lead to capital outflows and tighter domestic financial conditions. These developments are also expected to impact Indias commodities market, contributing to elevated volatility, with energy and agricultural commodities facing inflationary pressures, while industrial metals may reflect uneven global demand trends.

The Company continues to closely monitor these developments and remains focused on prudent risk management and long-term value creation.

4. FUTURE PROSPECTS AND OUTLOOK

For the Indian economy, the outlook remains comparatively resilient, with India expected to remain among the fastest-growing major economies, supported by strong domestic demand, services exports, and ongoing policy reforms. However, near-term pressures arising from elevated global uncertainties, geopolitical tensions, and tighter financial conditions may temporarily impact inflation dynamics and external balances. These conditions are also expected to influence Indias commodities market, contributing to heightened volatility and cost pressures, particularly in energy and agricultural segments, while industrial metals may witness mixed trends amid uneven global demand. Overall, while global conditions remain fragile and risk-heavy, Indias medium-term growth trajectory is expected to remain strong and stable relative to other major economies, reinforcing its role as a key driver of global growth.

Despite the above challenges, the Company remains focused on strengthening its business fundamentals, leveraging technology, managing risks prudently, and capitalising on emerging opportunities to create sustainable value for its stakeholders.

5. RISKS AND CONCERNS

The Company like any other Company is exposed to specific risks that are particular to its business and the environment within which it operates. The Company is exposed to the market risk (including liquidity risk) and also the factors that are associated with capital market, which inter alia includes economic / business cycle, fluctuations in the stock prices in the market, besides the interest rate volatility and credit risk.

Risk Management Policy

The Company has implemented a systematic process to assist in the identification, assessment, treatment and monitoring of risks which provides the necessary tools and resources to management and staff to support the effective management of risks.

The Company is primarily engaged in investment in securities and commodities which involves macroeconomic risks, investee company specific risks, market wide liquidity risks and execution risks relating to the Company / its intermediaries.

(a) The macroeconomic risks, investee company specific risks are covered by investment decisions based on third party research and internal assessment.

(b) Market wide risks are assessed and managed by investment timing decisions.

(c) The execution risk is managed by dealing with reputed intermediaries and through own back office discipline re accounting and follow up of trades.

(d) All investment decisions are made after distinguishing among alternative courses of action with identification of expected risks.

The Company also faces credit default risks, concentration risk and industry specific risk while making Inter corporate loans to other body corporate. The Company performs the credit check on the prospective borrower considering various factors relating to the loan such as loan purpose , credit rating , and loan- to-value ratio and estimates the effect on yield (credit spread ). The Company mitigates the concentration risk, industry specific risks by diversifying the borrower pool relating to different industries. The Company periodically monitors and reviews the financial condition, credit rating, debt to equity ratio to minimize the credit default risks associated with the borrowers.