Khandwala Securities Ltd Management Discussions

Global Economic Review

Calendar year 2025 tested the resilience of the global economy more than it tested its growth. Output held up better than the headlines suggested, but the path to that resilience ran through an unusually crowded field of shocks - tariff shifts, two live regional conflicts, and a monetary cycle that stayed cautious even as inflation cooled. World output is estimated to have expanded by 3.4% in 2025, a number that masks a widening gap between advanced economies, which grew a moderate 1.9%, and emerging market and developing economies, which grew 4.4% on the back of continued strength in India and China. Easing price pressures and steady investment, particularly in technology and AI-linked capacity, did much of the work in keeping the expansion intact.

Inflation eased through the year to average around 4.1% globally, helped by the lagged effects of earlier monetary tightening and better supply conditions. World trade volumes grew a healthy 5.1%, a figure that would have been unremarkable in a calmer year but stood out in 2025 given how much tariff and trade-policy noise ran alongside it. Central banks, for their part, stayed data-dependent rather than pre-emptive, unwilling to declare victory over inflation while growth and labour markets still needed support.

The larger story of the year, however, was geopolitical rather than macroeconomic. The Russia-Ukraine conflict remained unresolved, and tensions across West Asia escalated at points into open conflict, repeatedly raising questions about energy security, shipping-route access and the durability of global supply chains. These episodes showed up directly in commodity markets, with crude oil and LNG prices moving sharply in response to each flashpoint before partially retracing. Trade policy added a second layer of uncertainty: despite periodic signs of improved dialogue between major economies, tariff actions and counter actions continued to influence corporate investment decisions and cross-border capital allocation through the year.

Looking ahead, the global economy is expected to settle into steadier, if unspectacular, growth of around 3.1% in 2026 and 3.2% in 2027. The more durable driver of this outlook is technology-led productivity artificial intelligence adoption spreading from software into industrial and healthcare applications which is expected to offset, at least partially, the drag from continuing trade friction and political uncertainty.

Source: World Economic Outlook, International Monetary Fund (April 2026 update); Company analysis.

Indian Economic Review

A year defined by tariffs and two conflicts

If 2025 was volatile for the world, it was doubly so for India, where the macro narrative shifted more than once within the same twelve months. The year began under the shadow of the US administrations April 2025 tariff actions, which widened into a broader US-China trade confrontation and, through reciprocal tariffs, drew in nearly every major US trading partner. India was initially subject to a 26% reciprocal tariff; by August 2025 this had escalated sharply to 50%, linked explicitly to Indias continued purchases of Russian crude. An interim trade understanding reached in February 2026 brought the rate down to 18%, before a US Supreme Court ruling that questioned the legality of country-specific tariffs pushed the effective rate down further to 10%, by the end of the fiscal year.

Tariffs were not the only source of stress. The year also carried live geopolitical risk across israel-palestine, israel-iran, parts of africa, and india-pakistan, layered on top of the continuing russia-ukraine war. The most consequential of these for markets was the israel- iran escalation of June 2025, which briefly threatened the strait of hormuz and sent brent crude up roughly 20% in the first three weeks of the month - a spike that took close to six months to fully unwind. Even as this played out, US equity markets stayed in a bull phase through most of the year on the strength of AI-related capital spending, with the S&P 500 up roughly 36% and the Nasdaq closer to 50%; a cumulative 75 bps of Fed rate cuts since September 2025, intended to support a softening labour market, added further fuel. A second, sharper flare-up between the US, Iran and Israel later in the year had a more direct bearing on emerging markets, given their outsized dependence often 50-90% of energy needs on supplies routed through the Gulf. Crude prices rose roughly 60% from February levels, and even developed-market pump prices climbed by around 40%. Against this backdrop, gold was the standout asset of the year, returning roughly 60%, while US Treasury yields stayed range-bound between 4% and 4.5%, closing near 4.31%, and the dollar carried a broadly weakening bias despite the volatility around it.

Growth, Capital Flows and the Currency

Indias own macro story moved through three distinct phases over the year an early period that looked close to a goldilocks scenario, a middle stretch dominated by tariff-related anxiety and Indias relative lack of an "AI story" compared with regional peers, and a final phase shaped by the supply disruption from the West Asia conflict. Foreign institutional investors were net sellers through most of the year, with outflows of roughly USD 16.9 billion across segments (USD 19.7 billion in equities alone), a trend that intensified sharply in March 2026 alone (USD 13.6 billion overall, USD 12.7 billion in equities) as the West Asian conflict peaked. The rupee bore the brunt of this pressure, depreciating 9.9% against the dollar over the fiscal year, with 4.1 percentage points of that move concentrated in March alone.

Domestic flows provided a meaningful counterweight. Systematic investment plan contributions grew 20.8% year-on-year to reach Rs3.5 lakh crore for the year, underscoring how much deeper and more resilient Indias domestic equity ownership base has become relative to prior FII-outflow episodes. Even so, nominal GDP growth moderated to 8.6% for the year, reflecting both the external drag and a broadly deflationary domestic price environment. The RBI stayed decisively growth-supportive, front-loading its easing cycle with 100 bps of rate cuts during the fiscal year (125 bps cumulatively since the cycle began), even as external volatility argued for caution. On trade policy, India used the year to diversify its options, concluding agreements with the UK, Oman and New Zealand, and finalising what has been described as its most significant trade agreement yet with the European Union. These agreements will take time to show up in trade flows, and in the interim Indias trade deficit widened to USD 333 billion for the year, from USD 287 billion previously though a growing services surplus, up to USD 214 billion from USD 189 billion, continued to offset a meaningful share of the goods gap. Forex reserves remained comfortable throughout, at approximately USD 700 billion, covering roughly eleven months of imports.

Fiscal Position: Consolidation Continues at a Measured Pace

The Centre stayed on its fiscal consolidation path but eased the pace of adjustment, setting a fiscal deficit target of 4.3% of GDP for FY2026-27 against 4.4% in the year just ended. To support consumption, the government paired income-tax relief with a rationalisation of GST rates, while simultaneously protecting capital expenditure the FY2026-27 Budget allocated Rs12.2 lakh crore toward capex, signalling that growth-supportive spending was not being sacrificed for near-term consumption measures. Execution through FY2025-26 stayed broadly on track, with the deficit through April-February running at 80.4% of the full year estimate of Rs15.6 lakh crore. The key swing factor for FY 2026-27 is external sustained elevation in crude prices, or renewed restrictions on Strait of Hormuz access, could pressure both the fiscal arithmetic and the capex allocation depending on how the government chooses to absorb the shock. Bond markets had already begun pricing in the end of the rate-cutting cycle along with heavier-than-expected government borrowing, pushing the 10-year yield up roughly 60 bps from its June 2025 level to touch close to 7% before easing 21 bps off its peak of 7.12% to end the year at 6.91%.

Inflation and the External Account: a Fragile Cushion

Deflationary conditions persisted through much of FY2025-26, a dynamic that supported rural consumption but also contributed to the moderation in nominal GDP growth to 8.6% for the year. On the external side, elevated crude prices worked against Indias trade balance, but sustained strength in IT services exports and global capability centre (GCC)-linked flows continued to provide an important cushion. That cushion, however, is not without risk: any disruption to services exports from Al-driven demand shifts, or to remittance flows from renewed geopolitical stress, could weigh further on the external balance, the currency, and by extension on FII sentiment, which has already shown itself capable of turning quickly. On headline inflation, the government chose to absorb rather than pass through the shock when crude briefly crossed USD 100 per barrel in March 2026, cutting excise duty on petrol and diesel by Rs10 per litre rather than allowing pump prices to rise in line with crude a decision that kept consumer inflation contained even as the fiscal cost of the move added to an already tight year.

Source: Ministry of Finance, Press Information Bureau; Reserve Bank of India; Ministry of Statistics and Programme Implementation; NSDL; publicly available market data. Company analysis and estimates.

Industry Overview

Where India Stands and How FY26 Played Out

Indias equity market has grown into one of the handful that genuinely move global allocation decisions. At roughly USD 4.9 trillion of market capitalisation, it ranks among the top ten markets worldwide, a position built over more than a decade of rising corporate earnings, deepening retail participation and a steady widening of the investor base beyond the metros. That scale, however, did not translate into a smooth year. FY26 turned out to be a correction year almost everywhere it mattered: the BSE Sensex gave back 7.1% and the Nifty 50 fell 5.1%, reversing the 5%-plus gains both indices had posted in FY25. The broader market was not spared either - the BSE Smallcap index slipped 3.3%, a sharp swing from the 8% rally it delivered the year before. Mid-caps were the one pocket of relative calm: the BSE Midcap index ended close to flat and the Nifty Midcap 150 actually closed the year in positive territory, even as most other segments were in the red.

Placed alongside global peers, Indias underperformance in FY26 stood out. Several Asian markets staged sharp rebounds - Koreas KOSPI more than doubled, up 103.6%, and Japans Nikkei 225 climbed 43.4%, both recovering from weaker FY25 years. The UKs FTSE 100 accelerated to an 18.6% gain, Chinas Shanghai Composite added a steady 16.7%, and the US S&P 500 advanced 16.3% on continued AI-led capital spending. Against this backdrop of broadly positive global equity returns, Indias decline was an outlier rather than part of a shared trend, reflecting the combined weight of FII outflows, tariff-related uncertainty and the West Asia- driven commodity shock discussed elsewhere in this report.

Index	FY2025-26	FY2024-25
BSE Sensex	-7.1%	+5.1%
Nifty 50	-5.1%	+5.3%
BSE Smallcap	-3.3%	+8.0%
BSE Midcap	-Flat	Positive
Nifty Midcap 150	Positive	-

 

Market / Index	FY2025-26 return
KOSPI (South Korea)	+ 103.6%
Nikkei 225 (Japan)	+43.4%
FTSE 100 (UK)	+ 18.6%
Shanghai Composite (China)	+ 16.7%
S&P 500 (US)	+ 16.3%
Hang Seng (Hong Kong)	+7.2%
tDAX (Germany)	+2.3%
Nifty 50 / BSE Sensex (India)	-5.1% / -7.1%

Source: BSE, NSE, Reuters, Company analysis. Index returns are on a price-return basis for the fiscal year.

A Market that Keeps Getting Wider, Even in a Down Year

What distinguished FY26 from prior corrections was how little the retail base retreated even as index returns turned negative. Total demat accounts in the country crossed roughly 22-22.5 crore, with close to 3.2 crore new accounts added during the year despite the weaker market backdrop, while the number of unique investors identified by PAN moved past 129 million by March 2026. The active client base on the NSE has now grown to around 46 million, a 24% compounded annual growth rate from just 5.17 million a decade earlier in March 2016 - a pace of expansion that has held up through multiple market cycles, not just the buoyant ones.

The composition of this growth is arguably more important than its pace. Well over half of all new investors registering on the NSE during the year were under 30, with a median age of 28 for the new cohort against 33 for the investor base as a whole, and women now account for close to a quarter of all investors - both signs that market participation is broadening across demographics rather than simply adding more of the same investor profile. Much of the incremental growth continues to come from Tier-2 and Tier-3 towns, consistent with the longer-run shift in how Indian households allocate savings: the combined share of equities and mutual funds in annual household financial savings has risen from under 2% in

FY12 to roughly 15% in FY25. Domestic institutions have been direct beneficiaries of this shift DII ownership of the NSE-listed universe rose to 16.6% by December 2025, converging with FPI holdings for the first time in recent memory, while individual investors, counting both direct holdings and indirect exposure through mutual funds, now account for close to 18.6% of NSE market capitalisation, up from 16.3% as recently as March 2024. The value of individual investors own direct equity holdings has risen from roughly Rs16.8 lakh crore in December 2020 to about Rs44.0 lakh crore by December 2025 - a scale of wealth creation that is now large enough to act as a genuine counterweight to foreign flows, rather than a residual data point beneath them.

Metric	FY2025-26 reading
Total demat accounts	22-22.5 crore ( 225 million), + 3.2 crore added in the year
Unique investors (PAN-based)	>129 million (March 2026)
NSE active client base	46 million (24% CAGR from 5.17 million in Mar 2016)
Equity + MF share of household financial savings	15.1% (FY25) vs 1.8% (FY12)
Women investors	1 in 4 of the investor base
Median age, new investors added in FY26	28 years (vs 33 years for the overall base)
DII ownership of NSE-listed universe	16.6% (Dec 2025) - now on par with FPI holdings
Individual investors share of NSE mcap (direct + via MFs)	18.6% (Dec 2025) vs 16.3% (Mar 2024)
Value of individual investors direct equity holdings	Rs44.0 lakh crore (Dec 2025) vs Rs16.8 lakh crore (Dec 2020)

Source: NSDL, CDSL, NSE, SEBI, industry data compilations. Company analysis.

SIPs Have Become the Markets Shock Absorber

If one behaviour explains why Indian markets no longer swing quite as violently on FII selling as they once did, it is the systematic investment plan. Average monthly SIP inflows have grown from about Rs3,660 crore in FY17 to roughly Rs29,130 crore in FY26, touching an all-time monthly high of nearly Rs32,090 crore in March 2026 - coincidentally the same month in which FII outflows peaked. Annual SIP inflows have compounded at more than 29% between FY21 and FY26, and full-year SIP contributions for FY26 came in at approximately Rs3.5 lakh crore, up close to 21% over the previous year. This is no longer a marginal flow: it is a large, recurring, relatively rate-and-headline-insensitive source of domestic liquidity that has meaningfully reduced the markets dependence on the mood of foreign investors in any given month.

Primary Markets Stayed Busy Through the Volatility

Primary market activity held up notably well against this turbulent secondary-market backdrop. Across the fiscal year, 366 companies accessed the IPO market - 112 through mainboard listings and a record 254 through the SME segment - together raising approximately Rs1.9 lakh crore, of which Rs1.8 lakh crore came from mainboard issuances. Nearly 90% of this activity was concentrated in the first nine months of the year, with the pace slowing as broader market sentiment weakened, yet full-year fund mobilisation still came in broadly comparable to FY25. The average mainboard issue size for the year was approximately Rs1,598 crore, a level consistent with a reasonably healthy, if more selective, capital-raising environment. Offer-for-sale structures continued to account for a large share of primary market proceeds - well over half of capital raised through IPOs during the year - reflecting sustained appetite among promoters and private equity holders to use buoyant listing windows for partial exits even as headline index returns softened.

Asset and Wealth Management: The Structural Story Continues

The asset management industry had a good year almost independent of what the benchmark indices did. Mutual fund AUM crossed Rs73 lakh crore by March 2026, up more than 12% year-on- year, with passive fund AUM growing faster still, up over 22%, as cost-conscious and increasingly sophisticated investors continued to shift allocations toward index-based products alongside actively managed equity and hybrid schemes. Wealth management is moving through a parallel transition, driven by a growing HNI and UHNI base and a broader shift in investor preference away from one-off product sales toward ongoing, portfolio-led advisory relationships. Digital platforms are central to this shift, giving clients real-time visibility into portfolios and enabling advisory-led engagement at a scale that would not have been possible through relationship-manager-led coverage alone. The structural headroom here remains large: financial asset penetration in India, while rising steadily, is still low by the standards of more developed markets, and the continuing entry of Gen Z and millennial investors many of them starting to invest well before the age at which previous generations typically began points to a multi-year runway for both asset gathering and advisory-led wealth management.

Regulatory Landscape: A Year of Structural Recalibration

FY26 was an unusually active year for capital markets regulation, with SEBI, the RBI and the government all moving in the same broad direction tighter risk controls in derivatives, stronger governance standards for intermediaries, and sharper investor-protection safeguards even as the same reforms sought to make room for continued innovation in digital and algorithmic trading. The principal developments during the year included:

- Derivatives risk tightening: SEBI introduced intraday, realtime monitoring of position limits for equity index derivatives, moving away from end-of-day checks and reducing the scope for intraday leverage build-up.

- Expiry and margin recalibration: The calendar-spread margin benefit in single-stock derivatives was withdrawn near expiry, expiry days were standardised across products, and the Order-to-Trade Ratio framework was tightened, together curbing excessive speculative activity.

- Algorithmic trading formalised: A formal registration, audit- trail and risk-control framework was introduced for retail participation in algorithmic and API-based trading, bringing a fast-growing segment of order flow under explicit regulatory oversight.

- Bank funding to brokers: The RBI tightened bank funding norms for brokers and other market intermediaries, reinforcing systemic risk controls around leverage in the broking ecosystem.

- Mutual fund product governance: Mutual fund expense structures were recalibrated around a base expense ratio with performance-linked components, alongside stronger ‘true-to- label and scheme-categorisation norms intended to reduce product overlap and improve investor clarity.

- Broker governance reset: Stock broker regulations were reset to widen permitted activity - intermediaries can now offer other RBI- or IRDAI-regulated financial services subject to SEBI approval - while simultaneously raising the bar on governance: clearer accountability for designated directors, record retention extended to eight years, and explicit prohibitions on assured- return offers and cash acceptance from clients.

- Crackdown on unregistered advice: Enforcement action intensified against unregistered investment advisors and informal digital promotion of financial products, including tighter scrutiny of ‘influenced activity.

- REITs and InvITs: REIT and InvIT frameworks were refined to standardise treatment within portfolios and widen access, extending the investable universe for both retail and institutional participants.

- Securities Markets Code, 2025: The proposed Securities Markets Code, 2025 now before the Parliamentary Standing Committee on Finance aims to consolidate Indias securities laws into a single, more coherent framework, sharpen definitions and approval processes for intermediaries and fintech platforms, and strengthen enforcement and disclosure standards across exchanges, clearing corporations and intermediaries.

(Source: SEBI, RBI circulars and press releases; publicly available regulatory filings. Company analysis.)

Structural Trends Likely to Shape the Next Phase

Beyond the years cyclical swings, a set of structural shifts is reshaping how Indian investors will engage with capital markets over the medium term. Taken together, they point toward an industry that looks meaningfully different in five years from how it looks today:

- From execution to ecosystem: Platforms built originally for trade execution are steadily broadening into full-service ecosystems spanning investing, advisory, credit and protection, reducing the number of separate relationships an investor needs to manage.

- From product to outcome: Investor engagement is shifting from one-off product sales toward ongoing, goal-based portfolio construction and advice, changing how firms are organised, measured and paid.

- Data and AI as core infrastructure: Analytics and AI are being embedded into risk assessment, portfolio monitoring and client communication used to augment rather than replace human oversight, particularly in advisory-led relationships.

- New access channels within guardrails: Frameworks such as the accredited investor regime and the continued buildout of GIFT City are widening the range of products available to eligible investors within clearly defined suitability and disclosure norms.

- Hybrid advisory as the default: The most durable model emerging is neither purely digital nor purely relationship-led, but a blend of the two digital reach and efficiency combined with human judgement for the decisions that matter most.

AN OVERVIEW OF KHANDWALA SECURITIES LIMITED

Khandwala Securities Limited has operated at the intersection of indian capital and indian enterprise since 1934, and the equity shares of the Company are listed on both the BSE and the NSE. Over nine decades, the business has evolved from a broking house into a multi-license, multi-product financial services platform - but the underlying purpose has stayed constant: helping capital find its way to the right opportunity, whether that capital belongs to a firsttime retail investor, a family office, or a company preparing to raise funds from the public markets.

For FY26, the Company has organised its business review around four go-to-market segments that reflect how KSL actually operates today, rather than the legacy classification used in prior years. These four segments are: (i) Equity Capital Markets, comprising Equity Broking, Investor AI (subscription and broking), KSL PPPS (Comprehensive Service Plan and Brokerage), Depository Participant income, Wholesale Debt Market operations, and Institutional Broking; (ii) Investment Banking, comprising Corporate Advisory and Merchant Banking; (iii) Asset Management - PMS; and (iv) Wealth Management. Each of these draws on the same underlying strengths - a SEBI registered Category-I Merchant Banker and Portfolio Manager license, a corporate membership of both exchanges, an in-house research desk, and a client base built over generations while serving a distinct client need and revenue model. The sections that follow review FY26 performance and positioning across each of these four segments.

Financial Highlights - FY2025-26

Metric	FY2025-26 Rs in Lakhs)
Total Revenue	935.63
Net Loss	127.03
Earnings Per Share (EPS)	(0.83)

Total income for the year came in at Rs935.63 lakh, down from Rs1,512.96 lakh in FY25 - a decline of approximately 38%, consistent with the broad-based correction across Indian equity indices and the sharp pullback in FII activity discussed elsewhere in this report. The revenue mix below reflects the Companys statutory segment classification for the year; the qualitative discussion that follows organises the same underlying businesses around KSLs four current operating segments.

Rs in Lakhs

Revenue Head	FY2025-26	FY2024-25	FY2023-24
Brokerage	285.75	435.52	465.11
Corporate Advisory Services	468.86	486.18	352.06
Income from Capital Market Operations	34.83	32.23	34.53
Other Income	146.19	559.03	18.39
Total Income	935.63	1,512.96	870.09

Note: Figures above are as per the Companys audited segment disclosures for FY2025-26, FY2024-25 and FY2023-24.

Segment-Wise Business Review

1. Equity Capital Markets

Equity Capital Markets remains the foundational access layer of KSLs platform - the segment through which the largest number of clients first engage with the Company, and the one that feeds referrals and cross-sell into every other business line. It brings together six distinct revenue engines: Equity Broking, Investor AI, KSL PPPS (CSP and brokerage), Depository Participant income, Wholesale Debt Market operations, and Institutional Broking.

Equity Broking

KSLs core broking business gives clients access to NSE and BSE cash, F&O and WDM segments through two distinct platforms - KSL Eazytrade, a mobile- and browser-first offering for the broad retail base, and KSL Prive, a concierge-style desk built for HNIs and UHNIs with institutional-grade analytics and a dedicated relationship manager. Both platforms are underpinned by the same research infrastructure, so a client trading a few thousand rupees and a client managing a multi- crore portfolio draw on the same quality of market intelligence. Brokerage income for FY26 stood at Rs285.75 lakh, roughly 30.5% of total Company revenue - lower than FY25 and FY24, in line with the industry-wide moderation in trading activity and index returns described in this reports Industry Overview. During the year, the Company continued to add trading accounts across the cash, WDM and F&O segments even as headline volumes softened, reflecting the resilience of the underlying client relationships even in a weaker market.

Institutional Broking

The institutional dealing desk serves banks and corporates (including FPIs) as active, continuous counterparties, differentiated by KSLs research focus and execution reliability rather than by scale alone. Brokerage revenue from this desk grew sharply in FY26, rising to Rs34,38,155 from Rs14,45,766 in FY25 - an increase of close to 138% - even as the broader brokerage line contracted, underscoring that institutional client engagement and market share gained ground through the year even as overall volumes were softer.

Client Category	FY2025-26	FY2024-25	FY2023-24
Mutual Funds	-	-	-
Insurance	-	-	-
Banks	2,66,027	3,16,340	3,06,248.62
Corporates (incl. FPIs)	31,72,128	11,29,426	1,07,71,790.03
Total	34,38,155	14,45,766	1,10,78,038.65

Note: Figures above represent brokerage revenue (in from the institutional dealing desk by client category, as disclosed by the Company.

Investor AI

Investor AI is KSLs Al-powered investing layer, delivered directly through KSL Eazytrade, giving clients access to curated equity baskets and thematic, rules-based strategies alongside the Companys traditional advisory-led broking. It sits at the centre of KSLs broader strategy to move a growing share of retail engagement from one-off transactions toward structured, repeatable investing behaviour - the same shift that is playing out across the industry as SIP-style discipline becomes the default mode of retail participation. FY26 saw continued build-out of this offering as a subscription-and- broking hybrid, positioning it as a scalable complement to the Companys advisory-led HNI franchise rather than a substitute for it.

KSL PPPS - CSP and Brokerage

KSL Portfolio Partners Pro Services (PPPS) combines active portfolio construction with a structured research cadence, sold through a Comprehensive Service Plan (CSP) model priced at Rs50,000 for a three-year engagement, alongside the brokerage generated as these portfolios trade. During the year, the ?? Company continued to invest in the PPPS platform - refining the sales playbook, building out client-facing performance reporting, and preparing new thematic strategies, including a basket built around Indias export-manufacturing renaissance and a small and midcap-focused strategy - positioning PPPS to convert a larger share of KSLs existing broking relationships into structured, fee-generating engagements over the coming years.

Depository Participant (DP) Income

As a CDSL depository participant, KSL earns steady, largely non-market-linked income from demat account maintenance and transaction charges. This line provides a useful counterweight to the more cyclical brokerage and institutional revenue streams, and its stability was a modest but genuine offset to the broader revenue decline in a difficult year for trading volumes.

Wholesale Debt Market (WDM) Operations

The Companys capital market operations desk generated Rs34.83 lakh in FY26, broadly stable against Rs32.23 lakh in FY25 and Rs34.53 lakh in FY24. In a year when the broader bond market saw yields harden before easing off their peak - as discussed in this reports Economic Overview - the steadiness of this income line reflects a deliberately conservative approach to proprietary and wholesale debt market positioning.

2. Investment Banking

KSLs Investment Banking segment operates under the Companys Category-I Merchant Banker registration and combines two closely linked capabilities: Corporate Advisory and Merchant Banking. Rather than positioning itself as a transaction shop, the teams stated approach - reflected consistently in how it engages promoters - is to begin with the clients business and growth trajectory, and design a capital strategy around that, rather than starting with a product to sell. This mid-market, promoter-first orientation is where KSL believes it can compete most effectively against larger, more transaction-volume-driven investment banks.

Merchant Banking revenue for FY26 came in at Rs468.86 lakh, modestly lower than Rs486.18 lakh in FY25 but well ahead of Rs352.06 lakh in FY24, and remained the single largest revenue line for the Company, at just over 50% of total income. This resilience is notable given how much primary-market activity was concentrated in the first nine months of FY26, as discussed in the Industry Overview section of this report, with issuance activity slowing materially in the final quarter. On the Merchant Banking side, the teams mandate mix during the year spanned SME IPO execution as Book Running Lead Manager, pre-IPO capital-raising advisory, and sector-specific financial and investor-communication advisory - work that, while sometimes slower to convert into signed mandates in a cautious market, has continued to build KSLs track record and relationships across mid-market promoters and their advisors.

Looking ahead, the Investment Banking team continues to build its pipeline against the backdrop of a primary market that stayed structurally busy through FY26 even as secondary market sentiment weakened - 366 companies accessed the IPO market during the year, as detailed in this reports Industry Overview - and the team remains focused on converting that pipeline into completed mandates as market sentiment stabilises.

3. Asset Management - PMS

KSL is a SEBI registered Portfolio Manager and the Asset Management - PMS segment is built around a research-led, long-term investment philosophy: understanding businesses beyond the numbers, identifying durable growth opportunities, and managing risk alongside returns rather than chasing short-term market movement. The segment is closely linked to the PPPS platform discussed under Equity Capital Markets, with PPPS serving as the primary distribution and client- relationship layer feeding into KSLs discretionary portfolio management capability.

This remains an early-stage, deliberately built-out part of the platform rather than a scaled AUM business today, and the Companys priority through FY26 was strengthening the underlying investment frameworks, client reporting infrastructure and strategy design including the two new thematic strategies referenced above ahead of a more active growth phase. Against an industry backdrop where domestic mutual fund AUM crossed Rs73 lakh crore and passive and alternative strategies both saw accelerating flows, KSL sees a clear medium-term opportunity to scale this segment as the platform matures, particularly among the Companys existing HNI broking and wealth management clients who are natural candidates for a portfolio-led, advisory-first relationship.

4. Wealth Management

Wealth Management at KSL is built on the principle of advice first, products second - moving beyond a single-product or transaction-led relationship toward ongoing, portfolio-level engagement across a clients full balance sheet. The segment offers access to fixed income and debt solutions, equity and market-linked products, insurance and risk protection, structured and select alternative opportunities, and estate and succession planning, with the explicit intent of serving HNIs, promoter families and business owners through life events and across generations rather than around single transactions.

This positioning is particularly relevant given the industry dynamics described in this reports Industry Overview: Indias HNI and UHNI base continues to expand, household allocation to financial assets keeps rising, and the broader industry is shifting away from product-push distribution toward advisory-led, portfolio-based engagement. KSLs approach - an integrated platform spanning broking, investment banking and advisory under a single institutional roof - is designed to let the Wealth Management team draw on capabilities across the Company (research, merchant banking access, PMS) that a pure-play wealth manager would not have in-house, and this integrated-platform advantage remains central to how the segment is being built out.

Research: The Engine Behind Every Segment

Research is not a standalone business line at KSL so much as shared infrastructure that runs underneath all four segments

- from the technical alerts and stock ideas that support Equity Broking and Investor AI, to the fundamental work that underpins PPPS and PMS portfolio construction, to the sector and company diligence that supports Investment Banking mandates. The team produces a structured cadence of output

- daily market briefs and audio updates, weekly sector and stock-pick notes, and monthly thematic and outlook pieces - and its flagship trading strategies carry a published, audited track record:

Research Strategy	Track Record	Hit Rate
Equity Edge	140 of 208 calls hit target	67%
Option Orbit	96 of 154 calls hit target	62%
Future Focus	110 of 158 calls hit target	70%

Note: Track record data as disclosed by the Company as of March 31, 2026. Past performance is not indicative of future results; futures, options and equity trading involve substantial risk of loss.

This research output has also earned external recognition over the years, with KSLs reports referenced by international data platforms and used by both domestic and foreign institutional investors as part of their own research process - a reach that is disproportionate to the Companys size and reflects the seriousness with which the research desk is run.

Opportunities and Threats

Opportunities

- Structural deepening of retail participation: Indias demat account base, now well past 22 crore accounts, and the continuing entry of younger, Tier-2/3 investors give KSLs Equity Broking, Investor AI and DP businesses a long structural runway that a single soft year does not change.

- Advisory-led wealth creation: The shift across the industry from transaction-led distribution toward advisory-led, portfolio- based engagement plays directly to KSLs integrated model, and supports the medium-term growth case for both Wealth Management and Asset Management - PMS.

- Sustained primary market and advisory activity: A primary market that stayed structurally active through FY26, alongside continued mid-market promoter appetite for capital and M&A advisory, keeps the Investment Banking pipeline well supplied even when execution timing slips.

- Rise of disciplined, systematic investing: SIP-style, rules- based investing behaviour - the pattern behind Investor AI and behind the industrys broader SIP culture - has proven far less sensitive to short-term index volatility than direct equity trading, giving KSL a more resilient growth vector within Equity Capital Markets.

- Regulatory reset favouring established players: Regulatory changes such as the Securities Markets Code and the reset broker governance framework raise the compliance and capital bar across the industry, which should over time favour established, well-capitalised, multi-license players like KSL over thinly capitalised new entrants.

Threats

- Macroeconomic and geopolitical volatility: Elevated crude prices, fiscal slippage risk, and any renewed disruption to trade or shipping routes remain live risks to both the broader economy and to capital-market sentiment, as detailed in this reports Economic Overview.

- Continued global trade and tariff uncertainty: The tariff and trade-policy uncertainty that shaped FY26 has not fully resolved, and further escalation would weigh on FII flows, currency stability and market sentiment simultaneously.

- Regulatory and compliance intensity: Tighter derivatives risk norms, revised expense frameworks in the mutual fund industry, and the broker governance reset all raise compliance costs and operating complexity across the industry in the near term.

- Fee compression from digital-first competitors: Discount and digital-first brokers continue to compress brokerage yields industry-wide, putting sustained pressure on fee and commission income across the broking business.

- Talent retention: As a knowledge-led business, KSLs performance across research, advisory and merchant banking depends heavily on retaining experienced talent in a market where demand for these skills remains intense.

Internal Control Systems and Their Adequacy

KSL maintains internal control systems designed to be proportionate to the size, nature and complexity of its operations, supported by documented processes and guidelines that are reviewed and updated as the business evolves. These controls are intended to ensure reliable financial and operational reporting, safeguard Company and client assets, and maintain compliance with the range of regulatory frameworks the Company operates under as a broker, depository participant, portfolio manager and merchant banker.

An independent firm conducts a structured programme of internal audit through the year, with findings reviewed by the Audit Committee of the Board, which also oversees the implementation of corrective actions. All operating subsidiaries are covered by this internal audit programme. Where regulatory inspections raise findings, these are addressed with the same rigour and reported transparently to both the Board and the relevant regulator, consistent with the compliance culture the Company aims to maintain across every segment of its business.

Risk Concerns and Risk Management

Risk management at KSL is overseen by the Audit Committee, with policies developed in consultation with relevant internal and external experts. Given how quickly prices and conditions can move

in the Companys core markets, the intent is for risk mitigation to be built into day-to-day decision-making across every business line, rather than treated as a separate, periodic exercise. The Company distinguishes between external risks - industry slowdown, competitive intensity, regulatory change, brand perception - which it cannot control directly but must plan around, and internal risks - cost discipline, liquidity, technology, operations and people - which it manages directly through policy and process.

Industry Risk

As a financial services business, KSLs prospects are tied to the health of the broader economy and financial sector, and to shifts in interest rates, political climate or regulation. Capital markets are inherently cyclical, and the Companys revenue will move with that cycle to some degree in any given year, as FY26s results illustrate. Management Perception: KSLs presence across four distinct segments - rather than a single product line - acts as a natural, if partial, hedge against a downturn concentrated in any one part of the market. No single segment or client category is intended to carry the majority of the Companys fortunes in any given year, and management continues to view diversification across Equity Capital Markets, Investment Banking, Asset Management and Wealth Management as a structural risk mitigant rather than a tactical one.

Liquidity Risk

In the event that clients do not honour financial commitments following an unexpected market move, the Companys own cash flow could be affected. Management Perception: KSL applies prudence in client onboarding and credit extension, with the internal audit team verifying client credentials before trading access is granted, and margin and settlement positions monitored on a continuous basis. Understanding each clients financial track record allows the Company to make informed, timely calls on margin requirements and pre-payment needs, giving it the flexibility to manage liquidity risk across a wide range of client profiles.

Economic Risk

A broader slowdown in Indian economic growth, or sustained volatility in global commodity prices - particularly oil - could weigh on the Companys business, both directly through capital market activity and indirectly through the purchasing power and risk appetite of the Companys client base. Management Perception: The Company manages this exposure by maintaining a conservative financial profile and prudent business practices, avoiding aggressive balance-sheet risk-taking even in strong markets, which helps preserve resilience through weaker ones.

Human Resource Risk

In a knowledge-led business, people are the Companys principal asset, and attrition or skill obsolescence among research, advisory or dealing talent could weaken KSLs competitive position. Management Perception: KSL has continued its multi-year transition from a family-run organisation to a professionally managed one, with delegated responsibility and structured investment in employee training and development. This, together with a genuinely open working environment, has helped keep attrition low relative to the demand the broader industry places on experienced talent.

Client Risk

The Companys revenue base includes a number of larger corporate and institutional relationships from which a meaningful share of revenue is generated in any given year. Management Perception: KSL has built long-term relationships with its clients as a matter of course, and as a risk management discipline has deliberately avoided over-reliance on any single client or narrow client base. During FY26, the institutional desk added new client relationships that are already generating regular business, consistent with the Companys ongoing effort to widen its client base across segments.

Regulatory Risk

Operating across broking, depository, portfolio management and merchant banking means KSL must maintain ongoing compliance with an evolving set of requirements from multiple regulators; any lapse could invite censure and reputational harm. Management Perception: KSL treats compliance as a discipline that runs across the full client and transaction lifecycle - from client identification and

KYC through execution and settlement - supported by compliance manuals communicated consistently across branches and business lines, to ensure uniformity and priority is placed on regulatory discipline across the Company.

Human Resources

KSL regards its people as its most valuable asset, and continues to invest in their development beyond core job skills. During the year, the Company ran an employee satisfaction survey alongside development-focused seminars conducted by the HR function, with feedback from these sessions feeding directly into corrective action where needed. Quarterly communication meetings keep employees informed of major developments across the business - from market conditions to deals executed - and the Company continued its programme of hiring management trainees into the research function, both building a pipeline of future talent and strengthening KSLs relationships with local management institutions.