Pune e-Stock Broking Ltd Management Discussions

This Management Discussion and Analysis Report for the financial year ended 31 March 2026 forms part of the Boards Report and has been prepared in compliance with the requirements of Regulation 34(2)(e) read with Schedule V (Para B) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. It should be read together with the audited standalone and consolidated financial statements of your Company and the notes thereto for the year under review.

1. Economic and Industry Overview

Macro-economic backdrop

Indian equity markets navigated an eventful year in FY 2025-26 due to US tariff & West Asia Crisis. However, it was partly supported by resilient domestic institutional and SIP-led retail flows, easing inflation and a supportive interest-rate environment, even as foreign portfolio flows remained intermittent. Continued formalisation of household savings into capital markets kept the structural investing trend intact, with the aggregate demat account base in the country crossing 190 million and the count of active clients on the exchanges remaining among the highest globally.

Broking industry structure and developments

The financial year was defined, above all, by the phased implementation of the Securities and Exchange Board of Indias (SEBI) strengthened equity-derivatives framework. Measures introduced progressively from October 2024 through December 2025 — including the rationalisation of weekly index expiries to one per exchange, an increase in minimum contract value and lot sizes, intraday monitoring of position limits, and the risk-monitoring circular of May 2025 — collectively curbed speculative activity. Industry index-option turnover contracted materially, with average daily premium volumes declining by over 30% during large parts of the year before a gradual, uneven recovery took hold in the second half.

SEBIs study on retail outcomes in the futures-and-options segment — which found that a very large majority of individual traders incurred net losses — reshaped investor sentiment and dampened speculative participation. Alongside, higher Securities Transaction Tax on derivatives and revised exchange transaction charges compressed per-trade economics across the industry.

For the broking industry, the consequences were twofold: transaction-linked brokerage yields came under pressure, hitting retail and discount-oriented models the hardest, while diversified full-service participants increasingly pivoted towards annuity-like and balance-sheet-led income streams. Margin Trading Facility (MTF) books expanded sharply as brokers channelled client demand for leverage into the cash segment, and distribution, research, proprietary treasury and depository income gained importance as brokers rebalanced away from a pure transaction model. Your Companys own performance during the year, discussed in Section 5, reflects precisely this transition.

1. About Your Company

Pune E-Stock Broking Limited is a full-service capital-markets intermediary and a corporate member of the National Stock Exchange (NSE), BSE and the Multi Commodity Exchange (MCX), and a Depository Participant of CDSL. From its origins in 2007 as a pure broking and distribution house. The Company has evolved into a diversified financial-services group offering equities and derivatives broking, commodity and currency trading, Margin Trading Facility, depository services, Merchant Banking, Distribution of mutual funds and other products, research, algorithmic trading, and portfolio and alternative-investment offerings. In July 2026, the company has received IRDAI approval to act as Corporate Agent to distribute Insurance products.

PESB holds a SEBI Registered Research Analyst licence and, more recently, a SEBI Registered Market Making licence and a SEBI Registered Alternative Investment Fund (Category III) licence, which together broaden its product shelf and revenue base. Services are delivered through a network of proprietary and franchise branches (Authorised Persons) spread across multiple cities, supported by an in-house research desk, relationship managers and a scalable technology platform. The group structure includes subsidiaries and associated entities, notably Pune Finvest Limited, Pune E - Stock Broking IFSC Limited (GIFT City), the PESB Alpha Fund and PESB Asset Management LLP, extending the groups presence across the IFSC, alternatives and asset-management space.

3. Opportunities and Threats

Opportunities

• Deepening retail penetration. With the national demat base now exceeding 190 million accounts and rising participation from Tier-2 and Tier-3 towns, there is substantial headroom to cross-sell advisory, distribution and depository services to an expanding investor pool.

• Shift towards balance-sheet-led income. Growing client demand for leverage in the cash segment supports continued, well-collateralised expansion of the Margin Trading Facility book, a higher- quality and more stable income stream than transaction brokerage alone.

• Alternatives and wealth management. The Category-III AIF licence, PMS/AIF distribution and the PESB Alpha Fund align the Company with affluent-client demand for alternative strategies and recurring, fee-based wealth-management revenue.

• IFSC / global access. The Companys presence at GIFT City (Pune E-Stock Broking IFSC Limited) opens access to NRI and global-investor flows and to IFSC-based products.

• New product verticals. Planned offerings in insurance, basket investing and merchant banking, together with the recently obtained market-making licence, diversify revenue and reduce dependence on any single stream.

Threats

• Regulatory intensity. Further tightening of the derivatives framework, margin harmonisation and rising compliance obligations could constrain transaction volumes and increase the cost of operations.

• Yield and price competition. Sustained price competition from zero-brokerage and discount fintech platforms continues to pressure brokerage yields.

• Market and concentration risk. Turnover — and therefore transaction income — remains sensitive to market-wide volatility, VAR spikes and concentration in option turnover.

• Technology and cyber risk. Increasing digital delivery and open-API proliferation elevate cyber and operational-resilience risk, which the Company mitigates through layered monitoring and an ISO 27001-aligned security posture.

4. Financial Performance and Operational Review

The discussion below is presented primarily on a standalone basis, which reflects the operating performance of the parent broking entity; a consolidated snapshot follows. Figures are in Rs Lakhs unless otherwise stated.

Standalone results

Abridged Statement of Profit and Loss (Standalone, Rs in Lakhs)

Particulars	FY 2025-26	FY 2024-25	Change %
Revenue from operations	5,144.80	6,088.31	(15.5)
Other income	1,296.43	1,085.91	19.4
Total income	6,441.23	7,174.22	(10.2)
Employee benefits expense	638.31	507.12	25.9
Finance costs	569.83	462.03	23.3
Depreciation and amortisation	113.91	118.24	(3.7)
Other operational expenses	2,705.28	4,061.21	(33.4)
Total expenses	4,027.33	5,148.60	(21.8)
Profit before tax	2,413.89	2,025.62	19.2
Tax expense	606.75	520.14	16.6
Profit after tax	1,807.14	1,505.48	20.0
Earnings per share - Basic (Rs)	11.53	9.62	19.9
Earnings per share - Diluted (Rs)	10.61	9.62	10.3

Although total income declined 10.2% to Rs6,441.23 Lakhs on lower Gross brokerage, profit after tax rose 20.0% to Rs1,807.14 Lakhs, and profit before tax rose 19.2% to Rs2,413.89 Lakhs. Employee benefits expense increased 25.9% to Rs638.31 Lakhs, reflecting investment in team strength, incentives and staff welfare. Finance costs rose 23.3% to Rs569.83 Lakhs, consistent with higher short-term borrowings raised to fund the growing Margin Trading Facility book.

Diluted EPS reflects the potential dilution from convertible warrants issued during the year.

Key balance-sheet indicators (Standalone, Rs in Lakhs)

Financial position

Particulars	As at 31-Mar- 26	As at 31-Mar- 25	Change %
Net worth (equity + reserves)	14,878.49	12,882.28	15.5
Money received against share warrants	812.25	-	New
Total borrowings	5,221.41	4,608.70	13.3
Trade receivables (incl. MTF book)	7,660.15	7,254.43	5.6
Cash and bank balances	14,898.04	14,233.23	4.7
Client account balances	8,766.78	7,618.63	15.1
Non-current investments	4,688.67	1,689.95	177.4
Total assets	30,430.56	25,858.43	17.7

The balance sheet strengthened during the year. Net worth grew 15.5% to Rs14,878.49 Lakhs, retained largely through internal accruals and supplemented by the issue of 20 lakh convertible warrants (of which 25% was received during the year and one allottee converted 1,00,000 warrants into equity shares). Short-term borrowings were augmented to fund MTF receivables. The sizeable cash-and-bank balance of Rs14,898.04 Lakhs is predominantly held as fixed deposits, a significant portion of which is placed as margin and bank- guarantee collateral with exchanges and clearing corporations. Non-current investments increased as the Company deployed treasury and expanded its strategic and fund investments, including the PESB Alpha Fund.

Consolidated snapshot

Consolidated highlights (Rs in Lakhs)

Particulars	FY 2025-26	FY 2024-25	Change %
Total income	6,733.88	7,664.38	(12.1)
Profit before tax	2,664.44	2,492.92	6.9
Profit after tax (before minority interest)	1,994.76	1,918.50	4.0
Profit after tax (owners of the Company)	1,955.87	1,831.86	6.8
Earnings per share - Basic (Rs)	12.48	11.70	6.7
Net worth attributable to owners	16,696.75	14,552.05	14.7

On a consolidated basis, profit after tax attributable to the owners of the Company grew 6.8% to Rs1,955.87 Lakhs and consolidated net worth attributable to owners rose 14.7% to Rs16,696.75 Lakhs, reflecting the combined contribution of the parent and its subsidiaries.

6. Key Financial Ratios and Return on Net Worth

In accordance with Schedule V (Para B) of the SEBI (LODR) Regulations, 2015, the key financial ratios (on a standalone basis) and the changes therein are set out below.

Key financial ratios (Standalone)

Ratio	FY 2025-26	FY 2024-25	Change %	Note
Current ratio (times)	1.98	2.35	(15.7)
Debt-equity ratio (times)	0.35	0.28	25.0	(a)
Debt service coverage ratio (times)	4.38	4.51	(2.9)
Return on equity / net worth (%)	11.93	11.29	5.7	(e)
Trade receivables turnover (times)	0.69	0.84	(17.9)
Trade payables turnover (times)	0.35	0.53	(34.0)	(b)
Net capital turnover (times)	6.04	4.49	34.5	(c)
Net profit margin (%)	35.13	24.73	42.1	(d)
Return on capital employed (%)	12.28	11.54	6.4
Return on investment (%)	30.07	64.30	(53.2)	(f)

Explanation of significant changes (movement of 25% or more):

• (a) Debt-equity ratio (0.28 Rs 0.35): the increase reflects higher short-term borrowings raised to fund the expanding Margin Trading Facility book.

• (b) Trade payables turnover (0.53 Rs 0.35): the decline is driven by a larger balance of client funds held in fiduciary capacity (client account balances rose 15.1%) relative to operating throughput, which is characteristic of a broking balance sheet and does not indicate any deterioration in payment discipline.

• (c) Net capital turnover (4.49 Rs 6.04): working capital contracted as current liabilities (client balances and MTF-linked short-term borrowings) grew faster than current assets, raising revenue relative to net working capital.

• (d) Net profit margin (24.73% Rs 35.13%): margin expanded as revenue from operations declined on lower brokerage while profit after tax rose, owing to a sharper fall in variable sub-brokerage costs and a higher-margin income mix (MTF interest, proprietary and treasury income).

• (e) Return on Net Worth: Return on net worth improved to 11.93% from 11.29%, an increase of 64 basis points, as profit after tax grew 20.0%. The improvement was moderated by a larger average net-worth base arising from retained profits and the proceeds received against convertible warrants during the year.

• (f) Return on investment (64.30% Rs 30.07%): the prior year benefited from exceptionally high realised and fair-value gains on a smaller average investment base; in the current year, returns normalised on a substantially larger average investment base, lowering the ratio.

7. Outlook

PESB enters FY 2026-27 with a more diversified and resilient earnings base. While the near-term trajectory of derivatives volumes will continue to depend on the pace of regulatory normalisation and market sentiment, the structural deepening of retail participation, the growth of the Margin Trading Facility book, and the scaling of distribution, research, alternatives, Merchant Banking, Insurance and IFSC offerings position the Company to grow high-quality, recurring income.

Strategic priorities for the year ahead include: Scaling the recently licensed market-making and merchant-banking activities; launching the planned insurance products distribution and basketinvesting verticals; growing the Category-III AIF and Mutual Fund distribution franchise; expanding the Authorised-Person and branch network into new geographies; and continued investment in technology, digital on boarding and cyber-resilience.

8. Risks and Concerns

Your Company operates in a regulated, market-linked business and is exposed to a range of risks. The principal risks and the framework for managing them are summarised below.

• Regulatory and compliance risk - Policy shifts, particularly in the derivatives framework and margining, and rising compliance obligations. Managed through a dedicated compliance function, board and committee oversight, and proactive adoption of regulatory changes.

• Market risk - Volume and income sensitivity to market-wide volatility, VAR spikes and concentration in option turnover. Managed through diversification of revenue streams and prudent proprietary- book limits.

• Credit and counterparty risk - Exposure on the Margin Trading Facility and client receivables. Managed through collateralisation, margin monitoring, and exposure limits.

• Liquidity risk - Need to fund the MTF book and meet exchange margin obligations. Managed through diversified funding lines, a large fixed-deposit buffer and quarterly liquidity stress tests.

• Technology and cyber risk - System downtime and cyber threats amid open-API proliferation. Managed through a layered cyber-defence set-up, continuous monitoring and an ISO 27001-aligned information-security framework, under the oversight of the Risk Management Committee.

• Operational and reputational risk - Errors, fraud and conduct risk. Managed through documented processes, segregation of duties, internal audit and staff training.

9. Internal Control Systems and their Adequacy

PESB has in place internal control systems commensurate with the size, scale and nature of its operations. These systems are designed to provide reasonable assurance regarding the reliability of financial reporting, the safeguarding of assets, the prevention and detection of fraud and error, compliance with applicable laws and regulations, and the orderly and efficient conduct of business, including adherence to Company policies.

The internal financial controls are periodically reviewed by the internal auditors, and significant findings, together with managements responses and action taken, are placed before the Audit Committee. The Statutory Auditors, in their report under Section 143(3)(i) of the Companies Act, 2013, have confirmed that the Company has maintained, in all material respects, adequate internal financial controls over financial reporting and that such controls were operating effectively as at 31 March 2026. The Board is of the view that the internal control environment is adequate and effective for the current scale of operations.

10. Human Resources and Industrial Relations

Your Company regards its people as central to its ability to serve clients and business partners. During the year, the Company continued to invest in team strength, capability-building and employee welfare, reflected in a 25.9% increase in employee benefits expense to Rs638.31 Lakhs. As on 31 March 2026, the Company had 85 employees (previous year: 66 employees).

Industrial relations remained cordial throughout the year. The Company remains committed to a merit-based, inclusive workplace and to the continuous training and development of its workforce, particularly in compliance, technology and client-servicing skills.

11. Cautionary Statement

Statements in this Management Discussion and Analysis describing your Companys objectives, projections, estimates and expectations may constitute "forward-looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could influence the Companys operations include economic and market conditions in India and abroad, movements in trading volumes and interest rates, changes in government regulations, tax laws and other statutes, litigation and other incidental factors. Your Company assumes no responsibility to publicly amend, modify or revise any forwardlooking statement on the basis of any subsequent developments, information or events. The financial figures in this report have been rounded off and regrouped wherever considered necessary.

For and on behalf of the Board of Directors Pune E-Stock Broking Limited Place: Pune Date: August 18,2026
Vrajesh Krishnakumar Shah	Archana Vinayak Gorhe
Chairman & Managing Director	Whole Time Director
DIN:00184961	DIN:02966578
R/o: 11 Krushnakunja, Girija Nayak	R/o: Omkar Swaroop Appts
Housing Society, Near Hyde Park	1436, Shukrawar Peth
Market Yard, Pune 411 037	Pune 411 002