IIFL Capital Services Ltd Management Discussions

Global economic review

Overview: Global economic growth declined marginally from 3.5% in 2023 to an estimated 3.3% in 2024. This was marked by a slowdown in global manufacturing, particularly in Europe and parts of Asia coupled with supply chain disruption and weak consumer sentiment. In contrast, the services sector performed more creditably.

The growth in advanced economies improved marginally to 1.8% in 2024 from 1.7% in 2023 while the emerging cum developing economies witnessed a slowdown in growth to 4.3% in 2024 from 4.7% in 2023.

On the positive side, global inflation was declined from 6.6% in 2023 to 5.7% in 2024 (projected at 4.3% and 3.6% in 2025 and 2026 respectively). This decline was attributed to the declining impact of erstwhile economic shocks, and labour supply improvements. The monetary policies announced by governments all over the world helped keep inflation in check as well.

The end of the calendar year was marked by the return of Donald Trump as the new US President. The new US government threatened to impose tariffs on countries exporting to the US unless those countries lowered tariffs for the US to export to their countries. This enhanced global trade and markets uncertainty has emerged as the largest singular uncertainty in 2025.

Regional growth (%)	2024	2023
World output	3.3	3.5
Advanced economies	1.8	1.7
Emerging and developing economies	4.3	4.7

(Source: IMF, KPMG, Press Information Bureau, BBC, India Today)

Outlook: The global economy has entered a period of uncertainty following the imposition of tariffs on products imported into the US and some countries announcing reciprocal tariffs on US exports to their countries. This is likely to stagger global economic growth, the full outcome of which cannot be currently estimated. This risk is supplemented by risks related to conflicts, geopolitical tensions, trade restrictions and climate risks. In view of this, World Bank projected global economic growth at 2.7% for 2025 and 2026, factoring the various economic uncertainties.

Indian economic review Overview

The Indian economy grew at 6.5% in FY 2024-25, compared to a revised 9.2% in FY 2023-24. This represented a four-year low due to a moderate slowdown within the Indian economy (marked by slower manufacturing growth and a decline in net investments). Despite the slowdown, India retained its position as the worlds fifth-largest economy.

Indias nominal GDP (at current prices) was H330.68 Trillion in FY 2024-25 (H301.23 Trillion in FY 2023-24). The nominal GDP per capita increased from H2,15,936 in FY 2023-24 to H2,35,108 in FY 2024-25, reflecting the impact of an economic expansion.

The Indian rupee weakened 2.48% against the US$ in FY 2024-25, closing at H85.47 on the last trading day of FY 2024-25. In March 2025, the rupee recorded the highest monthly appreciation since November 2018, rising 2.39% (arising out a weakening US dollar).

Inflationary pressures eased, with CPI inflation averaging 4.63% in FY 2024-25, driven by moderating food inflation and stable global commodity prices. Retail inflation at 4.6% in FY 2024-25, was the lowest since the pandemic, catalysing savings creation.

Indias foreign exchange reserves stood at a high of US$676 Billion as of April 4, 2025. This was the fourth consecutive year when rating upgrades outpaced downgrades on account of strong domestic growth, rural consumption, increased infrastructure investments and low corporate leverage (annualized rating upgrade rate 14.5% exceeded the decade-long average of 11%; downgrade rate was 5.3%, lower than the 10-year average of 6.5%).

(Source: Crisil Ratings)

Gross foreign direct investment (FDI) into India rose 13.6% to US$81 Billion during the last financial year, the fastest pace of expansion since FY 2019-20. The increase in the year was despite a contraction during the fourth quarter of FY 2024-25 when inflows on a gross basis declined 6% to US$17.9 billion due to the uncertainty caused by Donald Trumps election and his assertions around getting investments back into the US.

Growth of the Indian economy

	FY22	FY23	FY24	FY25
Real GDP growth (%)	9.7	7.6	9.2	6.5

(Source: MoSPI, Financial Express)

Growth of the Indian economy quarter by quarter, FY 2024-25

	Q1 FY25	Q2 FY25	Q3 FY25	Q4 FY25
Real GDP growth (%)	6.5	5.6	6.2	7.4

(Source: The Hindu, National Statistics Office)

The banking sector continued its improvement, with gross non-performing assets (NPA) for scheduled commercial banks (SCBs) declining to 2.6% as of September 2024, down from 2.7% in March 2024. The capital-to-risk-weighted assets ratio for SCBs stood at 16.7% as of September 2024, reflecting a strong capital position.

Indias exports of goods and services reached US$824.9 Billion in FY 2024-25, up from US$783 Billion in the previous fiscal year. The Red Sea crisis impacted shipping costs, affecting price-sensitive exports.

Indias net GST collections increased 8.6%, totalling H19.56 Lakh Crore in FY 2024-25. Gross GST collections in FY 2024-25 stood at H22.08 lakh crore, a 9.4% increase YoY.

On the supply side, real gross value added (GVA) grew by 6.4% in FY 2024-25. Primary, secondary and tertiary sector grew by 4.6%, 5.9% and 7.2% respectively.

Indias services sector grew at 7.2% in FY 2024-25 (9.0% in FY 2023-24), driven by public administration, defence and other services (expanded at 8.8% as in the previous year). In the infrastructure and utilities sector, electricity, gas, water supply and other utility services grew at 5.9% in FY 2024-25, compared to 8.6% in FY 2023-24. Meanwhile, the construction sector expanded at 9.4% in FY 2024-25, slowing from 10.4% in the previous year.

Manufacturing activity was subdued in FY 2024-25, with growth at 4.5%, which was lower than 12.3% in FY 2023-24. Moreover, government final consumption expenditure (GFCE) growth slowed to 2.3% in FY 2024-25, compared to 8.1% in FY 2023-24.

The agriculture sector grew by 4.6% in FY 2024-25 (2.7% in FY 2023-24). Trade, hotel, transport, communication and services related to broadcasting segment were estimated to grow at 6.1% in FY 2024- 25 (7.5% in FY 2023-24).

From a demand perspective, private final consumption expenditure at constant prices grew by 7.2%, indicating a rebound in rural demand and stronger consumer confidence.

The Nifty 50 and SENSEX recorded their weakest annual performances in FY 2024-25 in two years, rising 5.3% and 5.1% during the year under review respectively. Gold rose 40% to a peak of US$3,124 per ounce, the highest increase since FY 2007-08, indicating global uncertainties.

Total assets managed by the mutual fund (MF) industry jumped 23% or H12.3 Lakh Crore in FY 2024-25 to settle at H65.7 Lakh Crore. At close of FY 2024-25, the total number of folios had jumped to nearly 23.5 Crore, an all-time peak. During last fiscal, average monthly systematic investment plan (SIP) contribution jumped 45% to H24,113 Crore.

Foreign portfolio investments (FPIs) in India experienced high volatility throughout FY 2024-25, with net outflows from equity markets reaching US$15.65 Billion. There was significant selling pressure starting September end.

Outlook: India is expected to remain the fastest-growing major economy. Reserve Bank of India (RBI) has revised Indias FY 2025-26 GDP growth forecast downwards from 6.7% to 6.5% based on risks arising from US tariff levies on India and other countries. The following are some key growth catalysts for India in FY 2025-26:

Tariff-based competitiveness: India identified at least 10 sectors such as apparel and clothing accessories, chemicals, plastics and rubber where the US high tariffs give New Delhi a competitive advantage in the American market over other suppliers. While India faced a 10% tariff after the US suspended the 26% additional duties for 90 days, the levy remained at 145% on China, the biggest exporter to the US. Chinas share of apparel imports into the US was 25%, compared with Indias 3.8%, a large opportunity to address differential.

(Source: Niti Aayog).

Union Budget FY 2025-26: The Union Budget FY 2025-26 laid a strong foundation for Indias economic trajectory, emphasizing agriculture, MSMEs, investment, and exports as the four primary growth engines. With a fiscal deficit target of 4.4% of GDP, the government reinforced fiscal prudence while allocating H11.21 Lakh Crore for capital expenditure (3.1% of GDP) to drive infrastructure development. The February 2025 Budget marked a shift in approach, with the government proposing substantial personal tax cuts. Effective April 1, 2025, individuals earning up to H12 Lakh annually will be fully exempt from income tax. Economists estimate that the resulting H1 Lakh Crore in tax savings could boost consumption by H3-3.5 Lakh Crore, potentially increasing the nominal private final consumption Expenditure (PFCE) by 1.5-2% of its current H200 Lakh Crore.

Free trade agreement: India and the United Kingdom announced a free trade agreement to boost strategic and economic ties. This could lead to a significant increase in the export competitiveness of Indian shipments in the UK across the textiles, toys, leather, marine products, footwear, and gems & jewellery sectors. About 99% of Indian exports to UK will enjoy zero-duty access tariff cuts; India will cut tariffs on 90% of tariff lines and 85% could become fully duty-free within 10 years.

Monsoons: The India Meteorological Department predicted an ‘above normal monsoon in 2025. This augurs well for the countrys farm sector and a moderated food inflation outlook.

Easing inflation: Indias consumer price index-based retail inflation in March 2025 eased to 3.34%, the lowest since August 2019, raising hopes of further repo rate cuts by the RBI.

Deeper rate cuts: In its June 2025 meeting, the Monetary Policy Committee (MPC) reduced policy rates by 50 basis points, reducing it to 5.50%, while the inflation forecast dropped from 4.0% to 3.7%.

Lifting credit restrictions: In November 2023, the RBI increased risk weights on bank loans to retail borrowers and NBFCs, significantly tightening credit availability. This led to a sharp slowdown in retail credit growth from 20-30% to 9-13% between September 2023 and 2024. However, under its new leadership, the RBI has prioritized restoring credit flow. Recent policy shifts have removed restrictions on consumer credit, postponed higher liquidity requirements for banks, and are expected to rejuvenate retail lending.

(Source: CNBC, Press Information Bureau, Business Standard, Economic Times, World Gold Council, Indian Express, Ministry of External Affairs, Times of India, Business Today, Hindustan Times, Statistics Times)

Industry overview Equity markets

In FY 2024-25, the Indian equity markets experienced moderate growth amid periods of volatility. The Nifty 50 Index recorded a gain of 5.34% while the BSE Sensex index grew by 5.1%. Globally, the Hong Kong equities market led the pack with a strong rebound, posting a 39.8% gain, followed by Singapore and Germany, which delivered impressive returns of 23.2% and 19.9%, respectively. Some markets, including Japan and the Philippines, faced sharp declines.

Although the overall performance was positive, the year was marked by periods of strong rallies followed by sharp pullbacks, creating a challenging environment for investors. The early part of the fiscal year was bullish, but rising concerns about global economic conditions, elevated valuations, and sectoral shifts led to increased volatility in the latter half.

In FY 2024-25, Nifty Midcap 100 and Nifty Smallcap 100 indices gained 7.5% and 5.4%, respectively. BSE Smallcap and Midcap indices gained 8% and 5.6% respectively.

India slipped to the seventh position in global equity performance for FY 2024-25, as foreign investor outflows in the latter half of the year dampened early gains and curtailed market momentum. Despite this, Indias price-to-earnings (PE) ratio remained elevated—second only to the United States among major economies — highlighting the valuation premium. This rich valuation, alongside concerns over slowing growth, began to weigh on investor sentiment during the latter part of the financial year resulting in Foreign Institutional Investors (FIIs) sell-off.

While India remains among the most expensive markets globally, China and most other Emerging markets continue to trade at a discount relative to their historic avergaes. The US market, driven by its high-growth tech sector, commands the highest valuation. As elevated valuations persist, concerns around limited upside potential in Indian equities continue to surface.

In FY 2024-25, FIIs remained net sellers, pulling US$15.65 Billion out from Indian equities. Slowing economic growth and expensive valuations drove this sell-off, while alternative global opportunities diverted capital away from India. These outflows pushed key indices to multi-month lows, adding to market volatility and dampening investor confidence. October 2024 saw the highest net outflows of US$10.95 Billion. In contrast, Domestic Institutional Investors (DIIs) maintained a consistent buying stance throughout the fiscal year, collectively investing US$71.6 Billion in Indian stocks.

Indias weight in the MSCI Emerging Markets (EM) Index stood at 19.21% in April 2025, next to Chinas 29.57%.

Retail equity

Retail participation in the cash market (CM) segment grew significantly in FY 2024-25, with a 22.8% rise in active individual investors who have traded atleast once in a year— reaching 3.77 crore compared to 3.07 crore in FY 2023-24. The equity derivatives segment also saw increased engagement, as the number of retail traders climbed to 1.06 Crore, marking a 10.4% year-on-year growth. Around 85 Lakh investors traded in the CM and Futures & Options (F&O) segments during FY 2024-25, up from 77 Lakh in the previous year, indicating a growing risk appetite among Indian retail investors.

Excluding September 2024 and March 2025, individual investors consistently emerged as net buyers in the equity markets throughout FY 2024-25. Their net inflows crossed H1.2 Lakh Crore—more than 2.5 times the inflows recorded in the previous year. Impressively, the cumulative net investments by individual investors over the past five years have now exceeded H4 Lakh Crore.

Domestic brokerages registered a record 41.1 Million new demat accounts in FY 2024-25, bringing the total to 192.4 Million—the highest-ever annual addition in absolute numbers. The financial year also set a new benchmark with a monthly average of 3.42 Million new accounts. While the growth in account openings remained robust, the year-on-year growth rate moderated slightly from 32.2% in FY 2022-23 to 27.1% in FY 2024-25, primarily due to the expanding base of existing accounts.

Wealth management

Wealth management in India is undergoing rapid transformation, emerging as one of the fastest-growing segments within the financial services industry. This surge is driven by strong economic momentum and a growing population of high-net-worth individuals (HNIs) and ultrahigh-net-worth individuals (UHNIs).

The demand for wealth management services is projected to more than double, with Assets Under Management (AUM) expected to rise from H95.24 Lakh Crore (US$1.1 Trillion) in FY 2023-24 to H199.13 Lakh Crore (US$2.3 Trillion) by FY 2028-29. This robust growth will be fueled by evolving macroeconomic dynamics, increasing income levels, and a sharp rise in the number of affluent households. Of the H95.24 Lakh Crore (US$1.1 Trillion) in financial wealth held by affluent households in FY 2023-24, nearly H34.63 Lakh Crore (US$0.4 Trillion) is either self-managed or informally managed. As household wealth expands, the sector is poised for strong growth, offering considerable opportunities for both established firms and new entrants.

This growth is also marked by a significant shift in asset allocation strategies. Investors are increasingly diversifying away from traditional avenues such as fixed deposits, gold, and real estate, and turning toward more dynamic options like alternative investment funds (AIFs), real estate investmenttrusts (REITs), infrastructure investment trusts (invITs), private equity and cryptocurrencies.

The rising popularity of these new investment instruments highlights a growing appetite for higher returns and sophisticated financial tools. Foreign investment is gaining traction—especially among UHNIs—driven in part by the tax advantages offered through the Gujarat International Finance Tec-City (GIFT City).

Simultaneously, the industry is witnessing the rise of new client demographics, including millennials and women investors, each with unique financial preferences and goals. Women are taking a more active role in managing their finances, often possessing greater investible surpluses than their male counterparts. This demographic shift is prompting wealth managers to tailor their offerings to cater to these evolving client segments.

The outlook for Indias wealth management industry remains highly optimistic. The sector is buoyed by solid economic fundamentals, shifting investor profiles, and the increasing sophistication of financial products and services. With continued investment in talent and technology, wealth management firms are well-positioned to navigate current challenges and capitalize on emerging opportunities.

This promising landscape underscores wealth managements vital and growing role within Indias broader financial ecosystem.

(Source: Economic Times)

Mutual funds

The mutual fund (MF) industry saw its total AUM rise by 23%—an increase of H12.3 Lakh Crore—in FY 2024-25, reaching C65.7 Lakh Crore, according to data released by industry trade body AMFI. Of this growth, around H8.15 Lakh Crore was attributed to fresh investor inflows, while the remainder stemmed from mark-to-market gains.

By the end of FY 2024-25, the total number of investor folios had climbed to an all-time high of nearly 23.5 Crore. Of these, 16.4 Crore were in active equity-oriented schemes, and 1.6 crore were in hybrid funds, the AMFI data showed.

SIPs also gained significant traction during FY 2024-25. The average monthly SIP contribution surged by 45% to H24,113 Crore in FY 2024-25, up from H16,602 Crore in the previous year. The steady increase in SIP flows is a testament to the growing maturity of retail investors in understanding the importance of systematic and disciplined investing, and the trust they place in mutual funds as a core component of financial planning.

In March 2025, monthly gross SIP inflows recorded a slight dip, coming in at H25,926 Crore compared to H25,999 Crore in February 2025. This marginal decline occurred despite some spillover of SIP mandates from February to March, due to the shorter month shifting certain monthly contributions scheduled for the 30^th and 31^st.

Despite market fluctuations, long-term investors continued to adhere to their investment strategies. While short-term market uncertainties have tempered flows to some extent, domestic investor sentiment remains strong. Investors are adopting a cautious yet consistent approach, reassessing portfolios while maintaining long-term commitments.

(Source: AMFI, Times News Network)

Investment banking

Indian corporates set a new benchmark for fundraising in FY 2024-25, collectively raising an unprecedented H19.96 Lakh Crore through a combination of equity and debt instruments. This milestone was achieved despite global economic headwinds and market volatility. There was strong demand for capital across both primary equity and debt markets, marking the highest-ever fundraising recorded in a single financial year.

Country	Exchange	Total Amount Raised ($bn) (approx)
India	National Stock Exchange	19.5
USA	NASDAQ	16.5
USA	NYSE	15.9
Hong Kong	Hong Kong Stock Exchange	10.4
China	Shanghai Stock Exchange	8.8

(Source: Money Control, Economic Times, ibef.org)

In 2024, the NSE reached a significant milestone by leading Asia in initial public offerings (IPOs) and setting a global record for equity capital raised in the primary market. A total of 268 IPOs were launched during the year, including 90 Main Board listings and 178 SME platform listings, collectively raising around H1.67 Lakh Crore.

This represents the highest number of IPOs in a single calendar year, underlining robust investor confidence and the growing depth of Indias equity markets. Globally, while IPO activity saw a slight dip with 1,145 listings in 2024 compared to 1,271 in 2023, India stood out by accounting for nearly a quarter of Asias IPO activity — firmly establishing its position as a key player in global capital markets.

Driven by strong private equity inflows, mergers and acquisitions (M&A) activity in India surged 26.4% in FY 2024-25, reaching a total deal value of $99.9 Billion, up from $79.05 Billion in the previous fiscal year. The momentum is expected to continue into FY 2025-26 supported by shifting investor sentiment, evolving deal structures and dynamic market conditions. In FY 2024-25, there were 3,103 transactions compared to 2,598 deals recorded in FY 2023-24.

Portfolio Management Services (PMS)

PMS is a tailored investment service for managing portfolios of clients by fund managers. These services are designed for High Net Worth Individuals (HNIs) and Ultra High Net Worth Individuals (UHNIs) with a minimum investment of H50 Lakh.

In 2024, despite witnessing volatile trading, schemes from the PMS industry managed to deliver up to 70% returns by betting on thematic and diversified strategies.

Investments into PMS have grown steadily over the past one year and AUM of the industry has grown by 14% year-on-year to H37.80 Lakh Crore as of March 31, 2025.

(Source: Money Control, https://www.sebi.gov.in/statistics/ assets-managed/assets-managed.html)

Alternative Investment Funds (AIF)

Alternative Investment Funds (AIFs) are pooled investment vehicles created to raise capital from investors for deployment into non-traditional asset classes. Unlike conventional investments such as stocks, bonds, or mutual funds, AIFs typically invest in areas like private equity, venture capital, hedge funds, real estate, commodities, infrastructure, and other alternative opportunities.

The AIF space in India has witnessed significant growth over the past decade, marked by a sharp rise in the number of funds available for investment. The total commitments raised by AIFs surged by over 340% in just six years — from H2,82,148 crore in FY 2018-19 to H13,49,051 Crore in FY 2024-25 — highlighting the growing investor appetite for alternative investment strategies.

From FY 2012-13 to FY 2024-25, the AIF sector has recorded an impressive compound annual growth rate (CAGR) of 76.9% in commitments raised.

Insurance

Indias insurance sector is on a secular growth path. Over the past two decades, life insurance new business premiums have grown at a steady 14.6% CAGR. As at end of FY 2024-25, total life insurance new business premium collections stood at H3,973 Billion. Premiums earned in the non-life segment comprising of segments like motor, health, marine, fire, crop etc., totalled H3,077 Billion. Rising penetration, improving disposable incomes and savings, easing regulatory environment, continued product innovation, increasing awareness of risks are all driving the growth of the sector.

(Source: ibef.org)

Regulatory changes during FY 2024-25

1. To safeguard investor interests, SEBI has mandated the direct pay-out of securities from the clearing corporation to clients demat account. This move reduces the risk of misuse or misappropriation of securities by brokers, enhances operational efficiency through faster and more accurate transfers and ensures greater transparency with a clear audit trail of securities transactions.

2. To curb abnormal or non-genuine transactions aimed at profit/loss transfers or creating artificial volumes, NSE has introduced the Reversal Trade Cancellation Mechanism (RTCM) on an intraday basis. This measure cancels trades that meet reversal transaction criteria, helping to enhance market integrity and protect investor interests.

3. To boost participation in the securities market, SEBI has revised the eligibility criteria for Basic Services

Demat Accounts (BSDA) to holdings below H10 Lakhs. Additionally, no Annual Maintenance Charges (AMC) will apply for holdings under H4 Lakhs.

4. The SEBI (Stock Brokers) (Amendment) Regulations, 2024, introduced Chapter IVA, establishing an institutional mechanism to prevent and detect fraud or market abuse. Stock brokers must implement strong surveillance systems and internal controls to monitor trading activities. They are also required to report suspicious activities, fraud, and market abuse to stock exchanges, ensuring transparency and regulatory compliance.

5. SEBI, through circular SEBI/HO/MIRSD/MIRSD- PoD/P/CIR/2025/0000013, has introduced a regulatory framework to ensure safer participation of retail investors in algorithmic trading via brokers. Exchanges are tasked with setting implementation standards to establish systems and procedures that enable retail investors to access Algo-trading with appropriate safeguards.

6. SEBI has strengthened the equity index derivatives framework to enhance investor protection and market stability. Key measures include tighter risk management through upfront option premium collection and intraday position limit monitoring, increasing contract value from H5 Lakhs to H15 Lakhs, and rationalizing weekly index derivatives products. The framework also emphasizes investor education to raise awareness of derivatives trading risks.

7. To enhance investor protection and promote professionalism, SEBI has introduced revised guidelines for Investment Advisers (IAs) and Research Analysts (RAs). The guidelines cover deposit requirements, qualifications, and mandate minimum disclosure terms to clients. This ensures regulatory integrity by allowing only registered and compliant professionals to provide investment advisory and research services.

8. SEBI, through its circular dated February 28, 2025, has mandated industry standards for Key Performance Indicator (KPI) disclosures in draft and final Offer Documents. This ensures a uniform approach to identifying and disclosing KPIs as per the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 (ICDR Regulations).

9. SEBIs circular dated March 11, 2025, introduced a faster Rights Issue framework with flexible allotment to specific investors. Under this framework, Rights Issues must be completed within 23 working days from Board approval. This aims to accelerate the process, improve efficiency, and boost investor participation.

10. As per SEBI (Merchant Bankers) Regulations, 1992, merchant bankers must maintain and preserve due diligence records for at least five years. To streamline this, stock exchanges have launched an online Document Repository platform for merchant bankers to upload and manage these documents electronically. This platform ensures efficient record-keeping and easier access to due diligence documents related to public issues.

Company overview

IIFL Capital Services Limited (formerly IIFL Securities Limited), (hereinafter referred to as "IIFL Capital" or "the Company"), with over decades of industry experience, is a prominent player in the Indian financial services landscape. The Company provides a comprehensive suite of offerings, including broking, wealth management, financial product

distribution, institutional research and investment banking. Its broad and diverse clientele comprises corporates, institutional investors, sovereign wealth funds, international portfolio investors, mutual funds, insurance companies, banks, pension funds, alternative investment funds, trusts, high-net-worth individuals, and retail investors. As of the end of FY 2024-25, the Company had a total AUM of H 2,204 Billion.

Strengths

Renowned brand identity: IIFL Capital has a strong brand identity and customer-focused approach, reinforcing its position as a trusted and reliable player in the industry.

Experienced leadership and skilled team: Led by a seasoned and knowledgeable leadership team, IIFL Capital employs a systematic, data-driven approach to decision-making. The Companys relationship managers, distinguished by their strong academic credentials and professional expertise, are well-equipped to address the unique needs of its clients. With a commitment to in-depth research and personalised service. the Company ensures that its clients receive tailored financia strategies aligned with their specific goals and aspirations.

Increased focus on investment banking and institutional broking: IIFL Capital stands out in the investment banking sector, leveraging its in-depth understanding of customers and markets across diverse segments. With a skilled team of over 100+ employees across sales, research, and trading. the Company has a proven track record of executing large block placements for financial sponsors, public market funds, and promoters.

Access to diverse asset classes and tailored investment services: The Company provides a comprehensive solution for all financial needs, offering access to a wide range of asset classes, including equities, fixed income, commodities, currencies, derivatives, mutual funds, alternative investment funds, and portfolio management services. It features digital platforms such as Tradebox, Sensibull, Grobox, and algorithmic trading. This extensive array of offerings is designed to cater to varied investment preferences and risk profiles.

Pan-India presence: With over 3,500+ external wealth partners and more than 100 branches across India, the Company boasts extensive market access, enabling it to reach clients and markets nationwide. This broad presence enhances brand visibility, fosters trust, and allows the Company to leverage local expertise. It also facilitates forging strategic partnerships, attracting top talent, ensuring regulatory compliance, and establishing a strong foundation for scalability and future growth.

Opportunities

Increasing wealth management opportunities: Indias per capita income is projected to rise 13-fold to US$26,000 by 2047, reflecting a significant increase in individual wealth and the expansion of the high-net-worth (HNI) and affluent segments. This presents a strong opportunity for the Company to cater to the evolving wealth management needs of this growing demographic.

Geographic expansion:The Company can deepen its presence in Tier 2 and Tier 3 cities, tapping into underserved regions with high growth potential through its partners. Additionally, expanding its international footprint could attract global investors looking for exposure to Indian markets.

Digital innovation: Technology is a key lever for scale, differentiation, and deeper client engagement in the wealth management business. As client expectations shift and regulations evolve, digital experiences will define trust and preference. We see this as a long-term opportunity to lead with innovation and deliver sustainable growth.

Challenges

Increased competition: The financial services industry is highly competitive, with several established players and new fintech companies entering the market. New entrants offering low-cost or innovative services could challenge the Companys market share.

Regulatory changes: Financial markets are subject to constant regulatory changes. Any new regulatory measures from bodies like SEBI, RBI, or other authorities could impact the way IIFL Capital operates, affecting profitability or requiring adjustments to their business models.

Market volatility: The performance of financial products like equities, mutual funds, and derivatives is sensitive to market conditions. Extreme volatility or a downturn in the markets can lead to a decrease in investor participation, impacting revenues from broking, asset management, and advisory services.

Threats

Technology risks: As the Company expands its digital presence and service offerings, it is exposed to technology- related risks, including cybersecurity threats, data breaches, and system downtimes. Any security incidents could damage its reputation and lead to financial losses.

Economic slowdown: A slowdown in the broader economy could reduce consumer spending and investment activities, leading to a decline in demand for financial products and services, directly affecting IIFL Capitals growth and revenue.

Geopolitical risk: Geo political risks, trade wars and tariffs can cast a cloud on Indias economic growth. This in turn can impact market sentiments and fund flows which can adversely affect our business.

Operational review

In FY 2024-25, the Company achieved a consolidated revenue growth of 15%, totalling H25,674.31 Million compared to H22,312.87 Million in FY 2023-24. The Companys profit after tax for the period increased by 39% to H7,128.78 Million in FY 2024-25 from H5,133.47 Million in FY 2023-24.

The Companys financial products distribution (FPD) business revenue saw a significant increase of 32% to H5,093.83 Million in FY 2024-25 compared to H3,869.20 Million in FY 2023-24. This growth in the FPD business has been mainly due to asset addition with FPD AUM rising from H261 Billion in FY 2023-24 to H313 Billion in FY 2024-25.

The investment banking business continued to deliver record performance in FY 2024-25 with revenues aggregating to H2,379.19 Million. IIFL Capital continues to be the banker of choice for clients. The franchise is driven by consistent mandate wins, coupled with high quality execution. The investment banking division completed around 50 transactions in FY 2024-25. This includes 18 IPOs, 11 QIPs, private placements, rights issue, buyback and open offer transactions.

Financial performance

Particulars	March 31, 2025	March 31, 2024
	Audited	Audited
1. Income
a. Interest Income	4,192.13	3,288.25
b. Rental income	236.30	192.55
c. Fees and commission Income	19,621.77	18,131.98
Total revenue from operations (a+b+c)	24,050.20	21,612.78
2. Other income	1,624.11	700.09
3. Total revenue (1+2)	25,674.31	22,312.87
Financial performance		(H in Million)
4. Expenses
a. Employee benefits expense	5,905.17	4,570.45
b. Finance cost	1,800.05	1,480.27
c. Depreciation and amortisation expense	548.81	1,137.78
d. Fees and commission expense	4,962.04	4,771.45
e. Administration and other expense	3,212.37	3,526.91
Total expenses (a+b+c+d+e)	16,428.44	15,486.86
5. Profit before tax (3-4)	9,245.87	6,826.01
6. Tax expenses
a. Current tax	1,985.25	1,791.72
b. Deferred tax	131.84	-43.32
c. Tax adjustment for prior years	-	-55.86
Total tax expenses (a+b+c)	2,117.09	1,692.54
7. Profit for the period (5-6)	7,128.78	5,133.47

Income

Revenue from operations

The Companys revenue primarily comprises income from retail and institutional brokerage, investment banking, and distribution across various asset classes.

Interest income

Interest income constitutes 16% of the Companys consolidated total income. It saw a y-o-y growth of 27%; reaching H4,192.13 mn in FY 2024-25 from H3,288.25 Million in FY 2023-24, driven by an increase in the client margin funding book and interest earned on fixed deposits with stock exchanges.

Brokerage and related income

Brokerage and related income was flat at H12,148.75 Million in FY 2024-25 compared to H12,017.35 Million in FY 2023-24 mainly due to regulatory changes and market volatility.

Investment banking income

Investment banking revenues witnessed a growth in line with the industry trends. Income in this segment grew by 6% to H2,379.19 Million in FY 2024-25 from H2,245.43 Million in FY 2023-24.

Financial products distribution income

Financial products distribution (FPD) income, accounting for 20% of the consolidated total income, increased by 32% in FY 2024-25. This growth is attributed mainly due to asset addition with FPD AUM increased from H261 Billion in FY 2023-24 to H 313 Billion in FY 2024-25.

Other income

Other income, primarily comprises investment income, interest income on inter-corporate deposits, income tax refunds, and profit resulting from gain on sale of property. Other income has increased due to Mark to Market (MTM) on investment & gain on sale of property.

Expenses

Finance costs

Finance costs, comprising of interest on borrowings, debt securities, and other financial expenses like bank guarantee commissions increased during the year. The increase came on the back of increased working capital requirements and emerging needs of margin funding book.

Fees and commission expense

Fees and commission expenses, including sub-brokerage fees, referral fees, and related expenses, amounted to H4,962.04 Million in FY 2024-25; reflecting a 4% y-o-y increase, primarily due to increase in passout to external wealth partners.

Employee benefit expenses

Employee benefit expenses, comprises salaries, wages, provident fund contributions, share-based payments, staff welfare, leave encashment, and gratuities. During the year employee cost increased mainly due to hiring for new wealth vertical and on account of ESOPs granted.

Depreciation, amortisation and impairment

Depreciation, amortization, and impairment expenses include depreciation of property, plant, and equipment, as well as amortisation/impairment of intangible assets.

Other expenses

Other expenses, comprising of technology, marketing, advertising, commission expenses, communication, legal and professional charges, office expenses, and electricity etc., decreased by 9% compared to the previous year.

Liquidity and capital resources

In terms of liquidity and capital resources, the Company consistently maintained liquidity through cash from operations and bank borrowings. As of March 31, 2025, cash, bank balances, and fixed deposits totalled H40,101.67 Million. The Company has sufficient cash reserves to fund its capital expenditure and working capital requirements.

Segment-wise performance

Particulars	March 31, 2025		March 31, 2024
	Segment revenue	Segment results	Segment revenue	Segment results
Capital market activity	22,290.13	8,563.56	19,403.69	6,609.57
Insurance broking and ancillary	2,558.35	305.00	2,586.74	381.89
Facilities and ancillary	1,064.65	377.31	564.20	(165.45)
Less: Inter segment revenue/unallocated	(238.82)	-	(241.76)	-
Total	25,674.31	9,245.87	22,312.87	6,826.01

Revenue from capital market activity surged from H19,403.69 Million in FY 2023-24 to H22,290.13 Million in FY 2024-25, marking a 15% y-o-y increase. This growth was primarily fuelled by the financial products distribution business. Revenue from the insurance broking and ancillary segments declined marginally by 1% from H2,586.74 Million in FY 2023-24 to H2,558.35 Million in FY 2024-25.

In contrast, the revenue from facilities and ancillary segments grew from H564.20 Million in FY 2023-24 to H1,064.65 Million in FY 2024-25 on account of profit booked on sale of property.

Key financial ratios

Details of significant changes in key financial ratios (i.e., change of 25% or more/less as compared to the immediately previous financial year)

Key Ratios	FY25	FY24	Variance %
Debt/Equity Ratio	0.37	0.65	-42%

Explanations

Debt equity ratio - The debt-to-equity ratio decreased from

0.65 in FY 2023-24 to 0.37 in FY 2024-25, primarily due to a decrease in borrowings from H11,538.50 Million as on March 31, 2024 to H 9,372.26 Million as on March 31, 2025.

Business outlook

The domestic macroeconomic environment continues to offer favorable enablers for sustained revenue growth over the medium term. We remain committed to enhancing our capacity across all business segments and are actively investing in technology, talent, and brand building to capitalise on these opportunities.

Retail and Institutional Broking, Investment Banking, and Financial Product Distribution have remained core focus areas for the Company. Our recent expansion into Wealth Management complements these established strengths— enabling a more balanced, diversified, and high-quality revenue mix.

Risk and concerns

As a financial services Company, IIFL Capital faces a range of internal and external risks, including regulatory, operational, technology, credit, ESG, and liquidity risks, all of which could affect its performance and reputation. Effective risk management is essential to address and mitigate these risks.

To this end, the Company has implemented a robust Enterprise Risk Management (ERM) Policy, which helps in identifying, assessing, mitigating, and monitoring risks. This approach safeguards clients assets, preserves the Companys reputation, and enables it to seize business opportunities.

Please refer to the Directors Report and "Our Governance Commitment" in the Narrative section for details on the Companys Risk Management framework and Risk and Concerns.

Human resources

The Company is committed to fostering a discrimination- free environment that champions diversity and inclusion. It recognises the varied characteristics, experiences, needs, and aspirations of its workforce. Employee engagement is a priority, supported by strong frameworks that encourage the development and retention of a highly motivated team. The Companys mission and strategy are reinforced through specialised training programs, equipping employees with both technical and behavioural skills essential for their professional and personal growth. The Company is deeply committed to the overall well-being of its employees, ensuring their holistic development. As of March 31, 2025, the Company employed 1,558 skilled individuals, with women representing 24% of the workforce.

For further details, refer to the "Human Capital Management" in the Narrative section.

Internal controls

The Companys systems are adequate and effective, tailored to the nature and scale of its business operations. It ensures compliance with applicable statutes and regulations through clearly defined processes, guidelines, and procedures, which are regularly reviewed to reflect changes in the business landscape and relevant laws. The Company maintains a well-established internal audit framework that covers processes and systems to protect assets, detect and prevent errors and fraud, ensure the accuracy and completeness of accounting transactions, and provide timely and reliable financial information. Internal auditors evaluate the adequacy of internal controls, with their reports being reviewed by the Audit Committee. Necessary actions are taken to strengthen systems and processes based on their recommendations.