The following discussion provides an overview of the operational and financial performance of the Company during the financial year 2025-26, along with the managements perspective on the future outlook. The analysis is based on current economic and industry conditions and may vary based on future developments, changes in government policies, and market dynamics.
Global Economy
The global economy remained resilient during 2025 despite heightened geopolitical tensions, evolving trade policies and volatility in energy markets. According to the International Monetary Fund (IMF), global GDP growth is projected at 3.0% in 2025 and 3.1% in 2026. Although inflation eased across several advanced economies and financial conditions improved, the IMF continues to highlight trade uncertainty, geopolitical risks and fiscal pressures as key challenges to the global economic outlook.
India registered one of the highest GDP growths in the World in 2025, making the IMF revise the GDP growth projections for the calendar year 2026 in the backdrop of robust private consumption, rapid expansion of high value services, lower US tariffs, and stronger momentum from 2025.
Overview of Indian Economy
The Indian economy continued to demonstrate resilience and sustained growth during FY 2025-26, despite a challenging global environment characterised by geopolitical uncertainties, evolving trade policies, volatile commodity prices and uneven global economic recovery. According to the Government of Indias Economic Survey, Indias real GDP growth was estimated at 7.4% in FY 2025-26, while the services sector remained a key contributor to economic expansion, registering estimated growth of 9.1%. Domestic consumption and investment continued to provide strong support to economic activity.
Private consumption remained an important driver of growth, with private final consumption expenditure estimated to grow by approximately 7% in FY 2025-26. Gross fixed capital formation also remained robust, growing by approximately 7.8%, reflecting continued investment in infrastructure, manufacturing and productive capacity.
Indias financial markets continued to deepen during the year, supported by increasing domestic investor participation, growing institutional investment, improved market infrastructure and regulatory developments. The primary capital market remained particularly strong. During FY 2025-26, total resource mobilisation through equity and debt primary markets stood at approximately ? +10.7 lakh crore. IPO volumes were around 20% higher than the corresponding period of FY 2024-25, while the amount mobilised increased by approximately 10%.
The SME capital market also continued to expand, with +217 SME listings during FY 2025-26. This reflects increasing access to organised capital markets for emerging and growth-oriented businesses.
Outlook of Indian Economy
The Indian economy is estimated to have grown at around 7.4-7.6% in FY2026, reaffirming its position as the fastest growing major global economy. Growth was driven by strong domestic demand, sustained government capital expenditure and resilient performance across manufacturing and services sectors, particularly infrastructure, construction, financial services and technology-enabled services.
Indias external trade remained resilient in FY2026 despite a challenging global environment characterised by muted goods demand, trade fragmentation and geopolitical disruptions. Total exports (merchandise and services combined) are estimated at approximately USD 840-860 billion, supported primarily by strong growth in services exports, while merchandise exports remained under pressure due to weak global demand.
Government capital expenditure remained a key growth catalyst, with Central Government capex sustained at around 3.1% of GDP, reflecting a continued focus on infrastructure led development. The Union Budget reiterated its long term commitment through elevated allocations toward transportation, energy transition, manufacturing ecosystems and logistics, alongside continued policy support for chemicals, fertilisers and domestic manufacturing.
Merchant Banking Industry Outlook
The outlook for the Indian merchant banking industry remains positive and growth-oriented, supported by the expanding capital markets, increasing fundraising requirements of corporates, entrepreneurial activity and continued development of Indias financial ecosystem.
The sustained growth in IPOs, SME listings, rights issues, preferential issues, qualified institutional placements and other capital-market transactions is expected to create opportunities for merchant bankers. In addition, companies are increasingly seeking professional assistance for capital raising, restructuring, mergers and acquisitions, valuation, due diligence, regulatory compliance and strategic financial advisory. Regulatory reforms are also expected to improve the efficiency of Indias primary markets. SEBI has undertaken measures aimed at reducing transaction timelines and improving ease of doing business; for example, the IPO listing timeline has been reduced from T+6 to T+3 working days.
1. BUSINESS STRUCTURE AND DEVELOPMENT
Interactive Financial Services Limited ("IFSL" or "the Company") is a listed public company engaged primarily in Merchant Banking, Investment Banking and Corporate Advisory Services. The Company is registered with the Securities and Exchange Board of India ("SEBI") as a Category-I Merchant Banker under Registration No. INM000012856 and operates with a focus on providing professional and integrated financial and capital-market solutions to its clients.
The Company provides a range of services across the capital markets, with particular emphasis on SME and Main Board IPOs, Further Public Offers (FPOs), valuation services, migration from SME platforms to the Main Board, takeovers, buybacks, corporate restructuring and business advisory services. The Company also undertakes advisory assignments relating to securities and business valuations, including valuations for corporate transactions, restructuring, financial reporting and other regulatory requirements.
The Company has developed its business around providing end-to-end assistance to enterprises seeking access to the capital markets. Its services encompass transaction planning, regulatory and statutory compliance, due diligence, preparation and coordination of issue-related documentation, liaison with regulatory authorities and other intermediaries, and support throughout the listing and capital-raising process. The Company also provides corporate advisory and business support services covering areas such as securities laws, Companies Act matters, pre-IPO restructuring, mergers and demergers, FEMA-related matters, governance audits and compliance health checks.
The Company has a particular focus on Small and Medium Enterprises (SMEs), which represent an important and growing segment of Indias capital markets. Through its merchant banking and advisory capabilities, the Company seeks to assist emerging enterprises in becoming capital-market ready and accessing appropriate avenues for raising capital and achieving their growth objectives. The Company believes that its professional expertise, capital-market experience, regulatory understanding and client-oriented approach provide a strong foundation for sustainable growth. Its team possesses experience across public issues, takeovers, mergers and acquisitions, preferential allotments, rights issues, valuations, migration, buy-backs and other capital-market transactions.
During FY 2025-26, the Company continued to focus on strengthening its merchant banking and advisory operations, enhancing client relationships and developing new business opportunities. Going forward, the Company intends to expand its presence in IPO and SME capital-market transactions, corporate restructuring and strategic business advisory, while maintaining a strong emphasis on regulatory compliance, professional integrity, confidentiality and quality of service.
Companys Position and Outlook
The Company believes that the structural growth of the Indian economy and increasing sophistication of the Indian capital markets provide a favourable environment for the growth of its merchant banking business. The Company intends to leverage its professional capabilities, industry relationships and knowledge of the regulatory framework to participate in emerging opportunities across IPO management, SME issues, preferential issues, rights issues, private placements, mergers and acquisitions, corporate restructuring, valuation and other financial advisory services.
Going forward, the Company will focus on strengthening its client base, expanding its origination capabilities, developing new business opportunities and providing value-added advisory services to corporates and investors. The Company will continue to maintain a strong emphasis on regulatory compliance, corporate governance, investor protection and professional standards.
While the industry outlook remains favourable, the Company remains mindful of risks arising from market volatility, changes in regulatory requirements, geopolitical developments, interest-rate movements, competition among intermediaries and fluctuations in primary-market activity. The Company intends to adopt a prudent and risk-conscious approach while pursuing sustainable growth opportunities.
Overall, the Company views FY 2026-27 as a period of continued opportunity for the merchant banking sector, supported by Indias strong economic fundamentals, expanding capital markets and increasing demand for specialised financial and strategic advisory services.
Source: IBEF, Industry Report - March 2026
2. OPPORTUNITIES AND THREATS
Opportunities
The Indian capital market continued to provide significant opportunities for merchant banking and investment banking intermediaries during FY 2025-26. The primary market witnessed strong activity, with 366 IPOs raising approximately ?1.9 lakh crore during FY 2025-26, including 109 Main Board issues and 257 SME issues. This continued expansion of the primary market presents meaningful opportunities for merchant bankers providing issue management and related advisory services.
The Company believes that the increasing number of enterprises seeking access to the capital markets for funding their expansion, working capital requirements, acquisitions and other strategic objectives will support demand for merchant banking services. In particular, the continued development of the SME capital market provides opportunities for the Company to assist emerging businesses in accessing institutional and public capital.
The Company also sees opportunities in Main Board IPOs, SME IPOs, preferential issues, rights issues, qualified institutional placements, takeovers, buy-backs, corporate restructuring, valuation assignments and other capital- market related advisory services. Increasing corporate activity, promoter funding, foreign investment and various strategic transactions are expected to support demand for independent valuation and transaction advisory services.
Further, the increasing participation of retail and institutional investors, improving financial awareness and continued development of Indias capital-market ecosystem are expected to contribute to sustained demand for professional financial and regulatory advisory services. The Company intends to leverage its experience and relationships to expand its client base and identify new business opportunities.
The Company will continue to focus on business development, strengthening client relationships, expanding its Main Board and SME transaction pipeline, and providing comprehensive advisory solutions while maintaining high standards of professional and regulatory compliance.
Threats
Despite the favourable long-term outlook, the Companys business remains closely linked to the performance and sentiment of the capital markets. Volatility in equity markets, changes in interest rates, inflationary pressures, geopolitical developments, global economic conditions, taxation policies and domestic economic or political developments may adversely affect the timing and volume of capital-market transactions.
The merchant banking industry is also characterised by intense competition, including competition from established financial institutions, investment banks, boutique advisory firms and other intermediaries. Increasing competition may exert pressure on professional fees and margins and may require the Company to continuously enhance the quality, efficiency and value proposition of its services.
Changes in SEBI regulations, listing requirements, disclosure standards and other applicable laws may increase compliance and execution requirements for merchant bankers. SEBI continues to update the regulatory framework applicable to merchant bankers and capital-market intermediaries, including through its Master Circular for Merchant Bankers.
The Company is also exposed to the risk that adverse market conditions may result in postponement, downsizing or cancellation of proposed IPOs and other capital-market transactions, thereby affecting the Companys transaction- based revenues. In addition, increased scrutiny relating to investor protection, corporate disclosures and issue processes requires merchant bankers to maintain robust due-diligence and compliance systems.
The Company seeks to mitigate these risks through diversification of its service offerings, prudent acceptance of assignments, strong regulatory and compliance processes, continuous monitoring of market developments and maintenance of professional standards.
Overall, the Company remains cautiously optimistic about the opportunities available in the Indian merchant banking industry and intends to pursue sustainable growth while maintaining a disciplined approach towards risk management and regulatory compliance.
3. SEGMENT-WISE / PRODUCT-WISE PERFORMANCE
The Company is primarily engaged in the Merchant Banking and financial advisory business. The Company operates predominantly as a single business segment and, accordingly, the segment-wise performance is not materially distinguishable into separate reportable segments.
During FY 2025-26, the Company continued to focus on strengthening its merchant banking and advisory operations and generating business through capital-market and corporate advisory assignments. The Companys operating revenue for FY 2025-26 stood at approximately ? 7.37 crore, as compared to ? 7.41 crore in FY 2024-25. Despite broadly stable operating revenue, profitability improved, with profit after tax increasing to approximately ? 3.49 crore from ? 2.85 crore, representing a growth of around 22.46%.
Going forward, the Company intends to strengthen its business development and client acquisition capabilities, expand its transaction pipeline and increase its presence across SME and Main Board capital-market transactions while continuing to maintain high standards of professional conduct, regulatory compliance and execution quality.
Since the Company operates predominantly in a single business segment, the segment-wise/product-wise performance should be read in conjunction with the Companys overall financial performance for the year.
4. RISK AND CONCERN
The Companys business is subject to various risks and uncertainties inherent in the merchant banking and financial advisory industry. The Company continuously monitors such risks and takes appropriate measures to minimise their potential impact on its operations and financial performance.
The Companys business is substantially dependent upon the level of activity in the Indian capital markets. Any Decline in market sentiment, volatility in equity markets, changes in interest rates, economic uncertainties or adverse domestic and global developments may affect the number and size of public issues, SME issues, takeovers, buy-backs and other corporate transactions, thereby impacting the Companys business opportunities and revenues.
Merchant banking is a highly regulated business and is subject to extensive supervision by SEBI and other regulatory and statutory authorities. Changes in applicable laws, regulations, disclosure requirements, listing norms, capital adequacy requirements or compliance procedures may increase the Companys regulatory and operational responsibilities and associated costs. SEBI has introduced revised requirements relating to merchant bankers, including capital adequacy and liquid net-worth requirements, which further emphasise the importance of maintaining adequate financial and compliance standards.
The merchant banking industry is competitive, with participation from established investment banks, financial institutions, boutique advisory firms and other SEBI-registered intermediaries. Increased competition may result in pressure on professional fees, margins and client acquisition. The Company seeks to address this risk through quality service, professional expertise, client relationships and timely execution of assignments.
Merchant banking requires professionals possessing specialised knowledge of capital markets, financial analysis, valuation, securities laws, regulatory requirements and transaction execution. The inability to attract, retain and develop qualified professionals could adversely affect the Companys ability to execute assignments and expand its business.
Increasing reliance on digital systems, electronic communication and technology-enabled processes exposes the Company to operational and cybersecurity risks, including data breaches, system failures, cyberattacks and loss of confidential information. The Company seeks to mitigate such risks through appropriate internal controls, information-security measures and restricted access to confidential data.
Risk Mitigation
The Company follows a prudent and risk-conscious approach towards accepting and executing assignments. It continuously monitors regulatory developments, maintains appropriate internal controls, undertakes due diligence, ensures compliance with applicable laws and regulations, and regularly reviews its operational and business processes.
The Company believes that strong regulatory compliance, professional expertise, effective internal controls, diversification of services and close monitoring of market developments will enable it to manage the risks associated with its business effectively.
Overall, while the merchant banking business remains exposed to market, regulatory, operational and transaction-related risks, the Company remains committed to managing these risks prudently and pursuing sustainable growth opportunities while maintaining the highest standards of professional integrity and investor protection.
5. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUECY
The Company has established and maintained an adequate system of internal controls commensurate with the size, nature and complexity of its operations. The internal control framework is designed to ensure the orderly and efficient conduct of business, safeguarding of assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records, reliability of financial information and compliance with applicable statutory and regulatory requirements.
Being engaged in the Merchant Banking and financial advisory business, the Company places significant emphasis on regulatory compliance, transaction-level controls, due diligence, confidentiality of information and proper documentation. The internal control framework covers financial reporting, operational activities, client assignments, regulatory compliances and other business processes.
The Companys internal control systems broadly include the following:
• Proper segregation of duties and defined authority and responsibility levels;
• Review and approval mechanisms for business and financial transactions;
• Controls over accounting and financial reporting;
• Periodic reconciliation and review of financial and operational information;
• Compliance with applicable provisions of the Companies Act, SEBI regulations, stock exchange requirements and other applicable laws;
• Monitoring of merchant banking assignments and transaction-related documentation;
• Appropriate due diligence and review procedures in relation to capital-market and advisory assignments;
• Controls for protection and confidentiality of client and transaction-related information;
• Periodic review of statutory and regulatory compliances; and
• Regular monitoring of identified operational and financial risks.
The Companys management periodically reviews the effectiveness of the internal control framework. The company has appointed independent qualified internal auditor for audit and compliance mechanisms, provide an independent review of the adequacy and effectiveness of internal controls and assist in identifying areas requiring improvement. Any observations arising from such reviews are appropriately considered and corrective measures are taken wherever necessary.
The Audit Committee of the Board plays an important role in overseeing the Companys financial reporting process, internal controls and audit-related matters. The Committee periodically reviews significant financial and operational matters and evaluates the adequacy of the Companys internal control environment.
The Company also continuously monitors developments in the regulatory framework applicable to merchant bankers and capital-market intermediaries and takes necessary steps to align its policies and procedures with applicable requirements. SEBIs regulatory framework for merchant bankers emphasises the need for appropriate systems, controls and compliance mechanisms commensurate with the nature and scale of operations. Based on the assessment undertaken by the management and the review carried out during the year, the Company believes that its internal control systems are adequate and operating effectively in relation to the size and nature of its business. The Company remains committed to continuously strengthening its internal control and compliance framework to support sustainable growth, protect stakeholder interests and maintain high standards of corporate governance.
6. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE
The Financial performance of the company on Standalone Basis during the FY 2025-26 as compared to FY 2024-25 is as under:
| Particulars | 2025-2026 | 2024-2025 | % of Increase/Decrease |
| Gross Revenue from operations | 737.07 | 740.81 | (0.50) % |
| Profit Before Tax | 482.86 | 393.36 | 22.75 % |
| Profit after Tax | 349.45 | 285.36 | 22.46 % |
Operational Performance
The Companys operating performance during the year reflects its continued focus on cost optimisation, efficient execution of assignments and improvement in operating margins. Operating profit increased substantially, with the operating margin improving from approximately 40.08% in FY 2024-25 to 55.22% in FY 2025-26.
7. MATERIAL DEVELOPMENT IN HUMAN RESOURCES/INDUSTRIAL RELATIONSHIP FRONT, INCLUDING NUMBER OF PEPOLE EMPLOYED
Human resource practices and policies at our company ensure that all employees, wherever they work, whatever their role is, are always treated equally, fairly and respectfully. We maintain consistent and transparent diversity policies.
During FY 2025-26, the Company continued to focus on maintaining a professional, inclusive and performance-oriented work environment. The Companys human resource practices are aimed at attracting, developing and retaining competent professionals possessing appropriate knowledge and experience in areas such as merchant banking, capital markets, financial analysis, valuation, regulatory compliance, corporate advisory and related functions.
Our human resource team believes in personnel management, which involves planning, organizing, directing and controlling of the recruitment and resource management, training & development, compensation, integration and maintenance of people for the purpose of contributing to organizational, individual and social goals.
The Company places due emphasis on employee engagement, professional development, performance management and appropriate allocation of responsibilities. The management continues to review the Companys human resource requirements in line with the expansion of its business activities and the requirements of its Merchant Banking operations.
People power is one of the pillars of success of company. As on 31st March, 2026 the Company employs 17 employees. Going ahead, the Company aims to retain and develop the existing employees and align their goals with the common business vision and mission.
8. THE DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS
During the financial year, the details of significant change in the key financial ratios i.e. change of more than 25% as compared to the previous year along with the detailed explanation is summarized below on standalone basis:
| Key Financial Ratios | F.Y. 2025-26 | F.Y. 2024-25 | Changes in % | Reasons for change |
| 1. Debtors Turnover Ratio (in days) | 6.66 | 6.65 | 0.14% | |
| 2. Inventory Turnover Ratio | - | - | - | - |
| 3. Interest Coverage Ratio | 6.74 | 7.17 | -6.08% | - |
| 4. Current Ratio (in times) | 11.86 | 13.92 | -14.83% | - |
| 5. Debt Equity Ratio (in times) | 0.03 | 0.02 | 73.38% | A new unsecured loan is borrowed by the company. |
| 6. Operating Profit Margin (in %) | 55.23 | 39.87 | 37.77% | Resulting in higher operating profitability |
| 7. Net Profit Margin (in %) | 47.36 | 38.52 | 22.95% | - |
| 8. Return on Net Worth | 11.68 | 14.06 | -16.98% | - |
9. CAUTIONARY STATEMENT
Statement made in the Management Discussion and Analysis describing the various parts may be "forward looking statement" within the meaning of application securities laws and regulations. The actual result may differ from those expectations depending upon the economic conditions, changes in Government regulation and amendments in tax laws and other internal and external factors.
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IIFL Capital Services Limited - Stock Broker SEBI Regn. No: INZ000164132 (Member ID - NSE: 10975 BSE: 179 MCX: 55995 NCDEX: 01249), DP SEBI Reg. No. IN-DP-185-2016, IA SEBI Regn. No: INA000000623, Merchant Banker SEBI Regn. No. INM000010940, RA SEBI Regn. No: INH000000248, BSE Enlistment Number (RA): 5016, AMFI-Registered Mutual Fund Distributor & SIF Distributor
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