Vertex Securities Ltd Management Discussions

MANAGEMENT

Global Economic Overview:

The global economy demonstrated resilience, recording a growth rate of 3.2%, despite ongoing geopolitical tensions, realignment of supply chains, shifting trade patterns and heightened policy uncertainty. Global inflation rates have stabilised after a period of general decline, enabling central banks to adopt more expansionary policies. Global average inflation declined from

5.7% in 2024 to 4.95% in 2025.

The global economic growth is expected to moderate to 2.8% in CY 2025 and 3% in CY 2026. Ongoing trade and tariff uncertainty, sustained geopolitical conflicts, and shifting policies under the new US administration can affect the financial markets stability, hindering investment and economic growth. However, Emerging economies are expected to drive global growth. Indias growth to remain stable at 6.2% in 2025 and 6.3% in 2026 supported by a strong services sector, proactive domestic policies and private consumption, particularly in rural areas.

Indian Economic Overview:

Despite global economic uncertainty, the Indian economy retained its position as one of the fastest-growing economies in the world. Indias real GDP growth in FY 2024-25 remained stable at 6.5%. Some of the key sectors driving this growth are construction, utility services, finance, real estate, professional services, public administration, defence and other services. Both the Private and Government Consumption, witnessed a growth rate of 7.3% and 4.1% respectively during FY 2024-25 over the previous year. On the external front, overall exports of India registered positive expansion during FY 2024-25. Although merchandise imports outpaced exports, widening the trade deficit, the sustained rise in net service receipts helped bolster the current account balance.

Going forward, sustained geopolitical conflicts, ongoing trade and tariff uncertainty, and shifting policies under the new US administration causing disruptions in global supply chains and volatile commodity prices could exert inflationary pressures.

However, the structural long-term growth story for India remains intact driven by favourable demographics and stable governance, ongoing domestic and foreign investments, robust manufacturing growth and improvement in trade and financial services. The proactive policies of the government, the income tax relief for salaried individuals in the Union Budget, the remarkable pace of digitalisation, the easing food inflation and growth in tier III and IV cities is expected to further augment the demand. Despite the potential risks, the Indian economy is predicted to sustain its growth with strengthened fundamentals.

Industry Overview:

The Indian stock market ended FY 2025 with modest gains, despite substantial FPI outflows in the second half of the year.

The Nifty delivered positive returns for its investors in FY 2024-25, outperforming certain Asian indices. The NSE and BSE midcap and small cap indices closed the year on a positive note, mainly driven by market rebound, increased retail investor participation, and attractive valuations. The Nifty Midcap150 and Nifty500 rose by 7.6% and 5.4% respectively. The BSE small cap index increased by 8%, while the midcap index increased by 5.6%. In comparison, the Sensex increased by 5.1% over the same period.

FY 2025 also witnessed a strong year of IPOs with a total of 318 companies, comprising 79 mainline and 239 SME, raise Rs. 172,484 crore surpassing the combined total amount raised in last two years. The FIIs were active in primary markets having contributed about 70% of the amount. However, the overall

IPO momentum has slowed down significantly in FY 2026 as compared to a resilient FY 2025 for the primary market. It is expected that FY 2026 will raise about $ 26 billion by way of IPOs. ( Source – ET) In last few years, there has been a surge in retail investor participation, reflected in the sharp increase in the Demat accounts over the years. Demat accounts, which facilitate electronic holding of stocks and mutual funds, are fast approaching the 200-million mark. However, this does not equate to unique investors, as individuals can hold multiple accounts; estimates peg the number of distinct investors at around 120 million. The total number of Demat accounts stood at 19.2 crore in FY 2025, with an addition of approximately 4.1 crore new Demat accounts, which is the strongest single digit growth in absolute numbers. (Source-IBEF) During the year FY 2025, Indian Capital Market has witnessed strong outflows by FIIs in the secondary market (across the year). However, FIIs primary inflows (mainly IPOs) compensated the outflows to a major extent in initial 9 months till December 2024. However, the sharp outflows in 4th quarter of FY 2025 in secondary market with lower number of IPOs led the yearly number fall to negative. DIIs flows and didnt let the market witness the fall which otherwise would have been seen.

The Indian Mutual Fund industry showcased robust growth, with Assets Under Management (AUM) at Rs. 74.41 lakh crores, which is more than a six-fold increase in the past 10 years (Source-AMFI) and is further expected to rise to Rs. 100 lakh crores in the near future. The industry has channelled household savings into risk capital, driven by a combination of technology and innovation. Retail participation has surged. The segment has registered over 10 crore SIP accounts. There is also a growing concern around early retirement planning and the need to build a strong retirement corpus. These growing anxieties have led to an increase in financial awareness, leading many to recognize the value of fee-based investment advisory services. industrys AUM Despite these significant remains less than one-third of total bank deposits, underscoring a vast untapped opportunity to mobilize household savings into market-linked investments.

Company Overview

Vertex Securities Limited ("Vertex" / "VSL") is a prominent broking company, with a history spanning over three decades since its establishment in 1993. The Company has been a significant player in the Indian Capital Market, serving pan India client base through a network of nearly 100 branches and franchisees with a large presence in Kerala. The Company is registered as a Merchant Banker, AMFI registered Mutual Fund Distributor and Research Analyst. The Company provides brokerage services in equity, equity derivatives, currency derivative and in commodities segments through its network of branches and franchisees. During the year, the Company made substantial upgradation of technology with launch of mobile App for trading and e-kyc. The Company has successfully executed Merchant Banking valuation assignments during the year. During the year under review, the total revenue of the Company was stable at Rs. 864.18 lakh as compared to Rs. 870.10 lakh in the previous year. This was mainly attributable to large participation by retail investors and favourable market conditions. The Company has made a loss of Rs. 74.86 lakh during the year as against profit of Rs. 37.96 lakh in the previous year.

On consolidated basis, the Company achieved a total revenue of Rs. 910.95 lakh as compared to Rs. 908.85 lakh in the previous year.

On standalone basis, Vertex Commodities and Finpro Private Limited (VCFPL), subsidiary of the Company achieved revenue of Rs. 46.77 lakh against Rs. 38.75 lakh in the previous year.

Business Outlook:

The Company expects the robust growth to continue in the financial year 2025-26. The revenue from broking business is expected to maintain a normal steady pace. The Company has taken steps to improve retail participation, client acquisition and increase daily volume across all the branches as well as franchisees. The introduction of mobile application and technology upgradation should help further in increasing the volume of business. The distribution business of Third-Party Products including Mutual Funds, NCDs and insurance products will also add to the overall revenue. The Company also expects increased revenue from Merchant Banking activities. However, there is fierce competition in the market. With this background, the Company expects to achieve a modest profit for the year.

Strengths, Weakness, Opportunities and Threats (SWOT) analysis: Strengths:

• Professional and ethical management

• Stringent cost control

• Strong Technological base

Weakness:

• Capturing large scale of business

• Operations limited to few States

Opportunities:

• Long-term economic outlook positive, will lead to opportunity for financial services

• Licensed Merchant Banking activities

Wealth management opportunities, particularly with growing retail participation

Distribution of various financial products

Threats:

• Geopolitical tensions affecting the world economy

• Lurking global slowdown / recession

• Exposed to systemic risks and economic risks

• Fierce competition from discount brokers

Risks & Concerns

The Company is primarily exposed to credit risk, liquidity risk and operational risks. Risk management and regulatory compliance are an integral part of the business model due to the nature of the industry. We have dedicated risk management & compliance teams to ensure that we conform to all the applicable regulations.

Internal Control systems

The Company maintains adequate internal control systems commensurate with the nature of business, size, and complexity of its operations. The Company has a system of continuous review of internal control policies and systems. The Internal Auditors reports are reviewed regularly by the Audit Committee and the Board.

Human Resources

Human resources are a focus area for the Company. Effective utilization of the human resources is done through reward and recognition of talent and rationalization of non-performers. Our employee strength was 74 as on March 31, 2025.

Key Ratios

Key Ratios	2024-25	2023-24
Current Ratio	0.34	0.30
Debt-Equity Ratio	0.33	0.26
Interest Service Coverage Ratio	(0.08)	0.28
Trade Receivables turnover ratio	1.45	1.61
Return on Capital employed	(0.02)	0.07
Operating Profit Margin (%)	-8.39%	5.50%
Net Profit Margin (%)	-8.39%	5.54%

Cautionary Note

Statements in this Report describing the Companys objectives, estimates and expectations may constitute "forward looking statements" within the meaning of applicable laws and regulations. Forward looking statements are based on certain assumptions and expectations of future events. These statements are subject to risks and uncertainties. Actual results could differ materially from those expressed or implied since there could be many factors which are beyond the control of the management. The Company assumes no responsibility in respect of forward-looking statements that may change due to subsequent developments.

For and on behalf of the Board of Directors
Ramachandran Unnikrishnan	George Mampillil
Managing Director & CEO	Executive Director & CFO
DIN: 00493707	DIN: 01976386
Date: July 29, 2025
Place: Kochi