Keynote Financial Services Ltd Management Discussions

Industry structure and developments

FY26 was a year of two distinct halves. For most of the year the macroeconomic backdrop was strong where the real GDP growth accelerated to an estimated 7.7%, retaining Indias position as a fast-growing major economy, led by resilient consumption, public capital expenditure and services growth. The Reserve Bank of India reduced the repo rate by a cumulative 100 basis points to 5.25% by December 2025 before pausing from February 2026, while foreign exchange reserves rose to a record high of over USD 728 billion.

This reversed sharply in the final quarter. The escalation of the West Asia conflict from late February 2026 drove up crude prices, spurred foreign portfolio outflowsand pushed the rupee to a record low of 94.60. Equity benchmarks surrendered their first-half gains, with the Nifty 50 ending the year below its opening level. The primary market saw record activity alongside broadly flat capital formation. India recorded its highest-ever number of mainboard IPO listings with 109 companies raising approximately 1.76 lakh crore, in line with the previous year driven largely by mid-sized and smaller issues. Private-equity-backed listings rose to around 35% of issuances, average listing-day gains fell to single digits, and over half the capital raised was concentrated in financial services and consumer discretionary. Domestic participation deepened, cushioning foreign outflows: SIP contributions reached record levels, active SIP accounts crossed 10 crore, mutual fund AUM grew to about 73.7 lakh crore, and demat accounts stood at around 22.5 crore. In December 2025, SEBI notified the first comprehensive overhaul of the Merchant Bankers Regulations since 1992.

Your Company continues to provide Merchant Banking services on the Equity Capital Markets side in the mid-market segment. It is currently working on several mandates as Book Running Lead Manager expected to fructify over the next 12 18 months, concluded a few Corporate Finance and Advisory mandates during the year, and continued serving Alternative Investment Funds, issuing more than 50 Due Diligence Certificates.

Your Company is committed to provide tailor made and efficient services boosted by its strength in Advisory and ECM execution capabilities. The record breadth of primary-market activity, the deepening of the domestic institutional investor base and a healthy pipeline of mid-market issuers seeking to access public markets present continuing opportunities for your Company to secure mandates in the segment in which it operates.

At the same time, the volatility witnessed in the capital markets in the closing months of the financial year which was driven by geopolitical developments and their effect on crude prices, currency and foreign portfolio flows is likely to continue and could weigh on the timing and pace of primary-market transactions in the next financial year.

During the financial year, ECM mandates were executed besides Corporate Finance mandates in the form of M&A, valuation services and ESOP advisory services. The vertical of providing Due Diligence services to AIFs remains well established, and the Company provided services to various AIFs during the financial year. The total revenue from sale of services for F. Y. 2025 - 26 was 705.10 lakhs as compared 593.73 lakhs for F. Y. 2024 - 25

The outlook for the current financial year in the industry segment in which your Company operates remains optimistic. The IPO pipeline is strong and the structural drivers of primary-market activity such as rising domestic savings channelled into equities, a growing base of mid-market issuers and supportive regulatory reform remain intact for your Companys operating segment. In the near term, however, activity is likely to remain challenging for the next financial year on account of the combination of domestic and global developments, particularly the trajectory of the West Asia conflict.

The size of your Company is a concern given the segment in which it operates. However, since your Company is structured like a boutique firm providing high-quality value-added services, it has carved out a niche for itself. During the year, SEBI notified the SEBI (Merchant Bankers) January 2026, which significantly revise the regulatory framework applicable to merchant bankers. Your Company is well poised to meet these requirements which includes, amongst other things, enhanced net-worth and record-keeping obligations.

Your Company is in existence as Merchant Banker since past several years has developed well-structured internal control systems to conduct business within the framework of Regulations. The present structure & systems are adequate and commensurate to the size of operations of your Company.

Your Company has adopted a policy of being selective while accepting assignments. Your Company has been able successful in making a mark as a life cycle banker & advisor to several corporates over the years. Improved capital markets are likely to have positive impact on financial performance of the company in the following financial year. The management is striving hard to grow the existing pipeline for mandates and focus on timely execution enabling the company to sustain its performance.

Your Company has adopted a policy of appointing key personnel for various segments. There are no material adverse developments in human resources / industrial relations front. Although, the Company has recently expanded its manpower strength, it would like to continue to operate with a lean and robust employee structure.

Significant changes in Key Financial Ratios (i.e. change of 25% or more as compared to the immediately previous financial year) along with detailed explanations thereof

Debtors to turnover ratio was at around 13.71 times as against around 2.80 times as at the end of previous financial year. Your company has experienced timely receipts of receivables during the financial impacting the debtors turnover ratio.

Being into services business not applicable.

The Interest Coverage Ratio is approximately (31.05) times as compared to 49.15 in the previous financial year primarily due to net loss on fair value of investments as per Ind-AS.

Current Ratio for this financial year is about 24.86 times as against 22.72 times for the previous financial year.

Debt Equity Ratio is 0.01 times in the current financial year, same as

The operating profit margins stood at (15.20%) as against the profit 48.45% reported in the previous year. During the year profitability is reduced on account of net loss on fair value of investments as per Ind-AS.

The net profit margin is at (25%) during current financial year as against 35% previous year mainly due net loss on fair value changes as per Ind-AS.

Not applicable

There has been a fall in Return on networth which stood at -2.32% as against 5.07% during previous financial year. Same is attributed to completion of very few assignments on hand, substantial decrease in net gain on fair value of investments coupled with constant expenses on account of salary & administrative costs.

Your Company follows Accounting Standards as prescribed by Institute of Chartered Accountants of India (ICAI) for preparation of financial statements; there is no other different treatment followed for the same.