LKP Securities Ltd Management Discussions

INDUSTRY STRUCTURE AND DEVELOPMENTS

The Indian capital markets continued to demonstrate resilience and growth, supported by strong domestic participation, increasing financialization of savings, and robust regulatory frameworks led by Securities and Exchange Board of India.

The broking industry has undergone structural transformation driven by:

Rapid adoption of digital trading platforms

Emergence of discount broking models

Increased retail investor participation

Growth in derivatives and options trading volumes

Additionally, rising awareness of mutual funds, ETFs, and other investment avenues has accelerated the shift from traditional savings to market linked instruments.

operates as a full service broking and financial services provider offering:

Equity, derivatives, commodity, and currency broking

Investment advisory and research services

Distribution of mutual funds and other financial products

The Company continues to focus on strengthening its positioning as a one-stop financial solutions provider , catering to both retail and institutional clients.

OPPORTUNITIES

Indias capital markets continue to expand in size and significance, aligning with the broader financialization of household savings and formalization of the economy. With favorable demographics, rising disposable incomes, and growing financial awareness, the equity broking industry is poised for sustained growth in volumes and investor participation over the coming years. Equities remain an attractive asset class for long-term wealth creation, especially in an environment of stable interest rates and rising corporate profitability.

The ability to onboard clients and complete the KYC journey entirely through digital channels has emerged as a cornerstone of growth. The rapid adoption of technology is redefining client engagement, operational efficiency, and personalized offerings. These digital innovations are empowering brokerages to scale efficiently while delivering superior user experiences.

Digital-first brokerages continue to dominate new client acquisitions by offering seamless DIY onboarding, intuitive platforms, and a wide suite of investment products integrated through open architecture. This transformation has driven a surge in participation from retail investors across Tier II and Tier III cities, contributing significantly to rising daily turnover and expanding the investor base.

In response to these developments, is undertaking conscious efforts to grow its footprint by targeting profitable client segments and leveraging its strong research and advisory capabilities. The Company is investing in advanced trading tools, enhancing digital infrastructure, and expanding its business partner network to accelerate client acquisition and engagement.

The strategic focus remains on creating product and service differentiation across segments, delivering value-added research, and offering a personalized client experience. Through operational agility and continuous technology enhancement, the Company aims to position itself as a cost-efficient and comprehensive financial solutions provider in an increasingly competitive landscape.

SEGMENT WISE / PRODUCT WISE PERFORMANCE

offers a comprehensive suite of research-driven equity advisory and trading services tailored for retail clients, high-net-worth individuals (HNIs), and institutional investors. The Companys diversified presence across major cities through its extensive network of branches and franchisees has enabled it to maintain a de-risked and scalable business model with broad market reach.

During FY 2025-26, the Company operated in a challenging market environment. On a consolidated basis, Revenue from Operations declined by 4.45% to Rs. 10,714.83 Lakhs from Rs. 11,213.95 Lakhs in FY 2024-25, while Profit After Tax (PAT) decreased by 22.08% to Rs. 1,029.10 Lakhs.

On a standalone basis, Revenue from Operations stood at Rs. 10,511.29 Lakhs, down 5.55% from Rs. 11,128.41 Lakhs in the previous year. PAT declined by 29.55% to Rs. 930.25 Lakhs from Rs. 1,320.49 Lakhs. The performance was impacted by lower revenues and margin pressures; however, the Company remained focused on operational efficiency, cost optimization, and sustaining its market position.

The Company continues to pursue growth opportunities through strategic initiatives, operational discipline, and enhanced customer focus, while maintaining confidence in its long-term business fundamentals and profitability.

OUTLOOK

The Companys performance was driven by the following factors:

Retail Participation Growth

Increased retail investor inflows supported trading volumes and client acquisitions.

Technology & Platform Enhancement

Focus on upgrading trading platforms, improving UI/UX, and integrating analytical tools enhanced client experience and engagement.

Product Diversification

Expansion into non-broking products such as mutual funds, SIPs, and structured investment products created additional revenue streams.

Research & Advisory Strength

In-house research offerings supported client decision-making and drove engagement.

Opportunities

Continued financialization of savings in India

Expansion of Tier 2 & Tier 3 investor base

Growth in passive investing and SIP culture

Cross-selling of wealth and investment products

Increasing adoption of digital and mobile-first platforms

Technology & Digital Initiatives

continues to invest in:

Advanced trading platforms and mobile applications

API-based integrations and middleware solutions

Data analytics and client behavior tracking tools

Automation of onboarding processes (eKYC)

These initiatives aim to enhance scalability, improve client experience, and drive operational efficiency.

Outlook

The outlook for the Indian broking industry remains positive, supported by:

Strong domestic liquidity

Increasing investor awareness

Continued policy support and regulatory oversight

is well-positioned to capitalize on these opportunities through:

Strengthening its digital ecosystem

Expanding non-broking revenue streams

Enhancing client engagement and service quality

Building a scalable and sustainable business model

RISKS AND CONCERNS AND THREATS

Regulatory Risk

Changes in margin norms, brokerage structures, or compliance requirements by Securities and Exchange Board of India may impact operations.

Competitive Pressure

Intense competition from discount brokers leading to pricing pressure and margin compression.

Market Volatility

Lower trading volumes during subdued market conditions may impact revenue.

Technology Risk

System downtime, cybersecurity threats, or platform inefficiencies could affect client trust and operations.

To address these concerns, the Company has embedded a strong risk management framework across all business functions. It invests proactively in technology upgrades, cybersecurity, compliance automation, and employee training to mitigate both internal and external risks. Regular audits, surveillance tools, and scenario-based stress testing help strengthen operational resilience. The Company remains committed to maintaining a prudent risk-return balance while ensuring compliance with all applicable laws and regulations.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company maintains robust internal control systems commensurate with its size and nature of operations. Key features include:

Strong compliance framework aligned with regulatory requirements

Periodic internal audits and risk assessments

Segregation of duties and maker checker processes

Continuous monitoring of transactions and client activities

The Audit Committee of the Board oversees the effectiveness of the internal control systems and reviews significant audit observations on a quarterly basis. The internal audit is risk-based and focused on identifying control gaps and recommending improvements. Follow-up audits are conducted to monitor implementation of corrective actions. This layered oversight mechanism, supported by a culture of accountability, ensures the adequacy and effectiveness of controls, timely risk mitigation, and continual improvement in business processes.

FINANCIAL PERFORMANCE AND OPERATIONAL REVIEW

During the year under review:

Revenue performance remained stable with growth driven by higher client activity and improved participation in derivatives (especially commodity)

Interest income on MTF/DPC contributed meaningfully to the revenue

Non-broking revenue streams, including distribution and advisory, contributed to overall income

Cost optimization initiatives helped maintain operating margins despite competitive pricing pressures

Share Capital

The paid up equity share capital of the Company as on March 31,2026 stands at Rs.16,46,30,398/- divided into 8,23,15,199 fully paid up equity shares of Rs. 2/- each.

Net Worth

The Net Worth of the Company stands at Rs.9915.86 Lakhs.

Secured Loans

The Company has secured borrowings of Rs.1350 Lakhs in the current year.

Total Income

During the year total income was reported at Rs.10578.37 Lakhs.

Finance Cost

The finance cost of the Company stands at Rs.820.96 Lakhs.

Tax Expense

The Company has incurred a tax expense of Rs.311.39 Lakhs in the current year.

HUMAN RESOURCES

The Company places significant importance to its human capital. As on March 31, 2026 there are 351 employees employed by the Company.

The Company recognizes its people as its most valuable asset. Focus areas include:

Building a skilled and client-centric workforce

Continuous training and development programs

Performance-driven culture with accountability

Strengthening leadership pipeline for future growth

KEY FINANCIAL RATIOS

The key financial ratios and details of significant changes in these ratios, to the extent applicable, as required by SEBI Listing Regulations are given below:

Key Financial Ratios	Financial Year 2025-26	Financial Year 2024-25	YOY Change	Favorable/ Adverse	Comments
(i) Debtors Turnover	1:5.50	1:5.86	- 6.11%	Adverse	Due to decrease in business volume
(ii) Interest Coverage Ratio	1:2.61	1:3.46	-24.59%	Adverse	Due to increase in borrowing for working capital requirement
(iii) Current Ratio	1:1.29	1:1.29	0.00%
(iv) Debt Equity Ratio	0.14:1	0.15:1	-10.00%	Favorable	Due to increase in Equity during the period
(v) Operating Profit Margin (%)	18.40%	17.25%	6.72%	Favorable
(vi) Net Profit Margin (%)	8.79%	11.33%	-22.36%	Adverse	Net profit decreased due to decreased in business volume
(vii) Return on Net Worth	20.45%	23.67%	-3.22%	Adverse	Due to decreased in Net profit during the year.

Cautionary statement

Statements in this MD&A describing the Companys objectives, projections, estimates, and expectations may be forward-looking statements within the meaning of applicable laws and regulations. Actual results may differ materially due to various risks and uncertainties.