HB Stockholdings Ltd Management Discussions

1) OPERATING RESULTS

During the year under review, the Companys Total Revenue from operations was Rs.

257.58 Lakhs compared to Rs. 151.46 Lakhs in the previous financial year. The Company incurred total expenses amounted to Rs. 1545.55 Lakhs as compared to Rs. 1174.43

Lakhs during the previous year/ Profit/(Loss) after tax stood at (1079.34 Lakhs) as against

Rs. (Rs.1198.70 Lakhs) the previous year.

2) INDUSTRY STRUCTURE AND DEVELOPMENTS

The Non-Banking Financial Companies (NBFCs) sector continues to play a pivotal role in the Indian financial system by bridging the credit gap across various sectors of the economy. NBFCs complemented the traditional banking sector by offering financial services tailored to the unique needs of their clients, leveraging their extensive geographical reach and quick service delivery.

During Financial Year 2025–26 witnessed a steady growth environment for the NBFC sector, supported by regulatory initiatives and increasing digital adoption, notwithstanding market volatility and global economic uncertainties. Looking ahead, prudent risk management, diversified funding are expected to strengthen the sectors resilience and support sustainable growth in Financial Year 2026–27.

During the year under review, the Indian capital market witnessed phases of volatility influenced by a combination of domestic developments and global macroeconomic events. Benchmark indices such as the BSE Sensex and Nifty 50 recorded moderate growth during the first half of the year; however, the latter half witnessed heightened volatility and intermittent corrections. Market sentiment was significantly impacted by geopolitical developments, fluctuations in foreign institutional investor (FII) flows, global economic uncertainties and evolving monetary policy expectations. Additionally, escalating geopolitical conflicts in certain regions and concerns over rising crude oil prices contributed to increased market volatility and investor caution.

Major stock indices such as the BSE Sensex and NSE Nifty experienced considerable fluctuations during the Financial Year 2025 26. The BSE Sensex opened at 76,882 on

01st April, 2025, rose to 80,677 on 30th September, 2025 and declined to 73,165 on 30 th March, 2026. The Nifty 50 Index opened at 23,341 on 01 st April, 2025, rose to 24,731 on 30 th September, 2025 and declined to 22,331 on 30 th March, 2026.

Being an investment-focused Non-Banking Financial Company (NBFC), these market developments had a direct impact on the Companys investment portfolio and business performance. Despite the challenging market conditions, the Company continued to adopt a prudent and disciplined approach to its operations and investment decisions, while closely monitoring market trends and associated risk factors.

3) OPPORTUNITY AND THREATS

During FY 2025-26, the NBFC sector witnessed a mixed outlook with both opportunities and threats. While credit growth moderated in certain segments, NBFCs continued to capitalize on opportunities in underserved markets, including rural and microfinance sectors, supported by technological advancements and increasing digital adoption. At the same time, the sector faced challenges such as rising borrowing costs, evolving regulatory requirements, and increasing competition from banks and fintech companies. The transformative shift in India s financial services landscape over recent years, driven by digital innovations such as neo-banking, digital authentication, the proliferation of the

Unified Payments Interface (UPI), and increased mobile internet usage, has redefinedthe dynamics of financial services, especially credit. The modularisation of financial services facilitated by these advancements has empowered NBFCs to offer specialized and accessible financial products.

4) FUTURE PROSPECTS AND OUTLOOK

Despite prevailing global economic uncertainties and geopolitical challenges, the Indian economy continues to demonstrate resilience and steady growth. The country s financial system remains robust, supported by prudent regulatory oversight and the continued improvement in the health of financial institutions. This stable environment is expected to further reinforce confidence in the financial system. Further, the expanding role of Non-Banking Financial Companies (NBFCs) in financial services, along with the strong foundation of Indias banking sector, characterized by substantial capital reserves, regulatory vigilance, and solid balance sheets, is expected to provide a stable platform. NBFCs are expected to continue evolving into more digital, compliant, and efficient institutions. Despite challenges related to funding and compliance, their adaptability and innovation are expected to support their continued role in India s financial ecosystem.

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 as well as factors associated with the Capital market, which inter alia includes economic and business cycle, fluctuations in stock prices in the market, besides the interest rate volatility and credit risk.

Risk Management Policy

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

The Company is primarily engaged in investment in securities, viz. Equity Shares, Preference Shares, Mutual Funds etc., which involve macroeconomic risks, investee company specific risks, market wide liquidity risks and execution risks relating to the Company and 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 .

(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 financialcondition, credit rating, debt to equity ratio to minimize the credit default risks associated with the borrowers.

The Company has established Internal Financial Control Systems to provide reasonable assurance regarding safeguarding of assets, maintenance of proper accounting records and the reliability of financial reporting.

The Company controls the operational risks associated with its business activities by way of prescribing / amending processes, imposing controls and defining roles and responsibilities. The Company assesses the effectiveness of its risk management plan through structured continuous improvement processes to ensure risks and controls are continually monitored and reviewed.

6) INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has established an effective internal control system to synchronise its business processes, operations, financial reporting, fraud control, and compliance with extant regulatory guidelines and compliance parameters. Strict internal control and systems are devised as a depiction of the principles of the highest standards of governance. The Company ensures that a standard and effective internal control strategies, and continued technology-driven innovation framework operates throughout the organisation, providing assurance about safekeeping of the assets and execution of transactions as per the authorisation in compliance with the internal control policies of the Company. The Audit Committee of the Board of Directors actively reviews the adequacy and effectiveness of the internal control system at periodic intervals in close coordination with the Internal Auditors. The Internal Auditors conduct periodic audits covering operational, financial, and compliance aspects of the Company s activities. Their observations and recommendations are reviewed by the Audit Committee, and appropriate corrective actions are taken wherever considered necessary. Based on the reviews conducted during the year, the Management is of the opinion that the Company s internal financial controls are adequate and were operating effectively during the year under review. These controls provide reasonable assurance regarding the safeguarding of assets, reliability of financial reporting, compliance with applicable laws and regulations, and the prevention and timely detection of material irregularities.

7) FINANCIAL PERFORMANCE

a) Share Capital: The Companys issued and subscribed and paid-up share capital consists of Equity Share Capital only. The Paid-up Share Capital of the Company as at 31 st March, 2026 stood at Rs. 7,13,76,650/- comprising of 7137665 Equity Shares of Rs. 10/- each.

a) Financial Assets and Non-Financial Assets: The Financial Assets and Non-Financial Assets for the year under review stood at Rs. 8992.74 Lakhs and Rs. 270.46 Lakhs respectively as against Rs. 10539.10 Lakhs and Rs. 227.80 Lakhs for the previous year.

b) Financial Liabilities and Non-Financial Liabilities: During the year under review, the Financial Liabilities and Non-Financial Liabilities stood at Rs. 1208.17 Lakhs and Rs. 81.18 Lakhs respectively as against Rs. 1412.80 Lakhs and Rs. 236.23 Lakhs during the previous year. b) Key Financial Ratios- Sector Specific (Standalone):

Ratio	Numerator	Denominator	31st March, 2026	31st March, 2025	% Variance	Reasons for change in ratio by more than 25% as compared to the previous year
Capital to risk- weighted assets ratio (CRAR)	Tier I Capital + Tier II Capital	Total risk weighted assets	95.68%	101.99%	-6.19%	Not Applicable
Tier I CRAR	Tier I Capital	Total risk weighted assets	95.59%	101.93%	-6.22%	Not Applicable
Tier II CRAR	Tier II Capital	Total risk weighted assets	0.09%	0.06%	51.16%	Due to an increase in Tier II Capital and a decrease in Risk- Weighted Assets
Liquidity Coverage Ratio*	NA	NA	NA	NA	NA	Not Applicable
Return on Net Worth	Net Profit after Tax	Total Shareholder Equity	-13.54	-13.15	2.96%	Due to a decrease in profit

* The Company is a Non Deposit taking/accepting Non-Banking Finance Company and asset size of the Company is less than Rs. 100 crore, so Liquidity Coverage ratio is not applicable to the Company.

8) HUMAN RESOURCES

The Company has adequate human resources, which are commensurate with the current volume of activities The human resource requirements are reviewed periodically by the Management, and the Company will induct competent personnel as and when there is an increase or expansion in its business activities.

9) CAUTIONARY STATEMENT

Statements in this Managements Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or predictions may be forward-looking statements within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed or implied in such statements. Important factors that could make a difference to the Companys operations include interest rates and changes in the Government regulations, tax regimes, economic developments and other factors such as litigation etc.