Munoth Financial Services Ltd Management Discussions

Capital markets are central to Indias growth story, catalysing capital formation for the real economy, enhancing the financialisation of domestic savings, and enabling wealth creation. As of December 2024, the Indian stock market has achieved new highs, with intermittent corrections, in the midst of geopolitical uncertainties, currency depreciation and domestic market volatility challenges. Investor participation has been a contributor, with number of investors growing. This growth, combined with active listing activity and recent measures by the regulator, viz. Securities and Exchange Board of India (SEBI), to temper excesses, is expected to foster sustainable market expansion.

The positive performance of the Indian stock was driven by strong profitability growth, rapid traction of digital financial infrastructure, expanding investor base and substantial reforms in products and processes. The period since the pandemic has seen a surge in individual and household participation as capital market investors through direct (trading in markets through their accounts) and indirect (through mutual funds) channels. Healthy corporate earnings, stable macro fundamentals, efficient and robust technology architecture facilitating efficient trading, clearing, and depository systems, and trust garnered by mutual fund ecosystem and online digital investment platforms have encouraged greater participation in capital markets

The recessionary trends visible in some parts of the globe cannot be isolated. The market participants will have to build resilience to withstand the onslaught of spillover risks and set appropriate risk appetite and risk governance systems to withstand in a highly uncertain business world.

The Companys business activities are all related to capital market segment and can be considered as single segment company

Indias key challenges are selling from FIIs, a high-interest rate, elevated inflation, and slowing earnings growth and most of the issues are getting factored into the prices. If the cautiousness continues in the short-term, it can be presumed that the worst is over, limiting further price corrections though valuation moderate

Elevated valuations and optimistic market sentiments in the US raise the likelihood of a meaningful market correction in 2025. Should such a correction occur, it could have a cascading effect on India, especially given the increased participation of young, relatively new retail investors. Many of these investors that have entered the market post-pandemic have never witnessed a significant and prolonged market correction. Hence, if one were to occur, its impact on sentiment and spending may be non-trivial.

Capital markets significantly contribute to capital formation, the financialisation of domestic savings, and wealth creation. Strong macroeconomic fundamentals, healthy corporate earnings, supportive institutional investment, robust inflows from SIPs, and increased formalisation, digitisation, and accessibility have all fuelled the markets continued growth.

The Company follows an extensive internal control system to ensure that prudential business policies are followed regularly in managing existing clientele and developing new business contacts. The Company ensures adherence to all internal control policies and procedures as well as compliance with all regulatory guidelines. The Audit committee reviews the adequacy of internal control system on regular basis

During the financial year 2024-25, the Companys total revenue from operations has increased to INR 57.11 Lakhs from INR 49.26 Lakhs in the previous financial year.

The Company has made a loss of INR 36.03 Lakhs in the current financial year as against a profit of INR 18.90 Lakhs in the last financial year.

Income from stock broking operations has increased to INR 47.54 Lakhs from INR 37.79 Lakhs in the previous financial year.

The Company provides institutional broking business and is empanelled with public sector banks and insurance companies.

As a Depository Participant the company offers facilities to both institutional and retail investors to maintain their investments in securities in electronic form. Income from Depository operations has decreased to INR 5.58 Lakhs from INR 5.59 Lakhs in the previous financial year.

The company has made application to SEBI for surrender of PMS registration.

The Companys MBD division is providing valuation services in accordance with the requirement of the various acts/statutory requirements.

Income from Merchant Banking & Portfolio advisory services has decreased to INR 4 Lakhs as against INR 5.88 Lakhs in the previous year.

The company will continue to focus on Investment Banking and Institutional Broking business.

The Company has a team of able and experienced professionals and the Company considers that the main strength is its human resources, who create a climate to suit its growth and excellence.

Statements in the Management Discussion and Analysis regarding the Companys objectives, estimates and expectations are within the scope of applicable laws and regulations. Actual performance might differ from those either expressed or implied.