Share India Securities Limited (SHAREINDIA) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q1 FY 2027 earnings conference call of Share India Securities Limited, hosted by Valorem Advisors. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Purvangi Jain from Valorem Advisors. Thank you, and over to you, ma'am.

Thank you. Good evening, everyone, and a very warm welcome to you all. My name is Purvangi Jain from Valorem Advisors. We represent the Investor Relations of Share India Securities Limited. On behalf of the company, I would like to thank you all for participating in the company's earnings call for the first quarter of the financial year 2027. Before we begin, let me mention a quick cautionary statement. Some of the statements made in today's earnings call may be forward-looking in nature. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated. Such statements are based on management's belief as well as assumptions made by, and information currently available to the management. Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decisions. The purpose of today's earnings conference call is purely to educate and bring awareness about the company's fundamental business and financial performance for the quarter under review. Now let me introduce you to the management participating with us in today's earnings call. We have with us Mr. Kamlesh Shah, Managing Director; Mr. Rajesh Gupta, Director; and Mr. Sachin Gupta, Chief Executive Officer and Whole Time Director. Without any delay, I request Mr. Kamlesh Shah to start with his opening remarks. Thank you, and over to you, sir.

Yes. Thank you, Purvangi, madam. Good afternoon, everyone. Thank you for joining us today for Share India's earnings presentation for the first quarter of financial year 2026-2027. We appreciate your continued trust and interest in our company. The first quarter was characterized by a rapidly evolving regulatory landscape, heightened geopolitical uncertainties and continued volatility in the global financial market. Domestically, while India's macroeconomic fundamentals remain strong, the capital market industry witnessed significant changes, including regulatory measures introduced by SEBI in derivatives segment and tighter funding norms described by Reserve Bank of India for top desk trading. Despite this industry-wide headwinds, I am pleased to share that Share India has delivered its strongest quarterly financial performance to the date. This demonstrates the resilience of our diversified business model, disciplined execution and continued focus on sustainable long-term growth. Talking about the financial performance. During the quarter, our stand-alone revenue from the operation increased by 28% year-on-year basis to INR 349 crores, while profit after tax grew by 32% to INR 90.85 crores. On a sequential basis, the stand-alone PAT increased by 21%, reflecting continued operational momentum. As at the consolidated level, the performance was even more encouraging. Revenue from operation increased by 31% year-on-year basis to INR 448 crores, while profit after tax rose by 48% to INR 124.41 crores. Compared to the previous quarter, consolidated PAT more than doubled, registering an impressive 114% sequential growth. Diversified business model. One of the Share India's key strength continues to be its diversified business model. Our presence across broking, market making, merchant banking, wealth management, treasury operations, technology-driven business and other financial services enabled us to reduce dependence on any single revenue stream. The diversification has allowed us to remain resilient even during the period of regulatory transition and changing market dynamics. Our financial position continues to be robust. As of 30th June 2026, our network stood at approximately INR 2,760 crores on consolidated basis, providing us with strong capital base to support business -- business expansion while maintaining financial flexibility. To further strengthen our funding profile, we have initiated commercial paper program backed by the highest short-term rating of CRISIL A1+. In addition, we are progressing with the issuance of nonconvertible debenture program which will diversify our borrowing sources, optimize funding costs and support growth of our leading and capital market business. Technology and innovation. Technology remains central to our long-term growth strategy. We continue to invest in artificial intelligence, automation, and digital capability to enhance customer experience, improve operational efficiency, strengthen compliances and support better risk management. These investments not only improve scalability, but also position us to respond effectively to evolving customer expectation and regulatory requirements. Growth initiative. Looking ahead, we remain focused on expanding our high-growth business. We see significant opportunities in margin training facility, wealth management, portfolio management services, alternative investment funds, family offices, merchant banking and institutional business. At the same time, we continue to strengthen our retail franchisee through digital platform and technology-led customer engagements. Funding strategy. Since Share India is launching CP and NCDs, this will help us to counter the RBI measures, which restricted top desk funding, and we continue to grow our business in an uninterrupted manner. Diversified funding framework. Current sources, we have bank borrowing and retaining company's profit to deploy for effective use, commercial papers, listed NCDs, internal accruals and many more. The benefits are lower cost of borrowing, funding diversification, liquidity, flexibility, supports MTF growth and efficient capital management. Outlook. Although the industry continues to face challenges arising from regulatory changes, funding cost and geopolitical uncertainties, we remain confident in the long-term growth prospects of the Indian capital markets. Supported by our diversified business model, strong balance sheet, technology-driven approach and experienced management team, we are well positioned to capitalize on emerging opportunities. Subject to overall market conditions, we remain confident of delivering around 20% growth during the current financial year. Before I conclude, I would like to thank our shareholders, investors, customers, business partners, regulators, bankers and our dedicated employees for their continued confidence and support. We remain committed to delivering sustainable growth, maintaining the highest standard of governance and creating long-term value for all our stakeholders. Thank you for your time and continued support. With these words, I would like to hand over proceedings to Mr. Sachin Gupta for detailed analysis and future growth strategy. Over to you, Sachin. Thank you.

Thank you very much, sir, for the -- for explaining the Q1 results in detail. And thank you, everyone, for joining the call today. Good afternoon. So as Kamlesh sir explained that we are very confident. Despite all the challenges from the regulatory side, we are confident that will keep on growing in this challenging environment. And as we all know, our focus is always -- since last 2, 3 years, our focus is to grow on the retail side and a lot of new products have been introduced and launched and slowly and gradually, all these products are showing positive results for us. I will just explain step by steps where we stand in terms of all the offerings and what are our future plans. So as Share India's core focus is into retail, now offline retail, and we are constantly opening our new branches in Tier 3 cities mainly. And the focus is to expand our MTF book and retail footprint into these cities and offering not only the broking, but all the wealth products and to all the customers at the ground level. So recently, we have opened 6 branches, mainly into [ Banaras, Indor, Ropal, Raipur, Agra and Narput ]. So [ Hyderabad ] also, 7 branches we have recently opened. And it's a mix of South and [indiscernible]. Focus is not on North only because we are already having a good presence in North. So we are hopeful that as we targeted 30 branches in next 2 years, 7 are already operational. Once these branches start showing purchase results, then we'll again continue our journey with the branches on the retail side and the Tier 3 cities. So retail business is showing good results. And as MTR book stands around INR 470-odd crore at the end of Q3 -- Q1. So despite the same volatility due to international factors, markets, especially mid-tier smaller stocks are extremely volatile. Still, we are able to hold on to our MTF numbers, and they are showing a mild growth. So INR 470 crore is the number. And by next 2 years, our target is that 4-figure, INR 1,000 crore book we are targeting in the next 2 years. So MTF is one thing where we are bullish and it gives us sustainable revenue. And with MTF, we're able to hold on to the clients and we get rub-off effect into the wealth for us and derivative side and everywhere. So retail side, MTF is at INR 470 crores. We launched our PMS in Q1. And at the end of Q1, our PMS AUM and the direct PMS and advisory stands at INR 150 crores. That's a very decent number as the PMS has launched in Q1 only. And our target by end of financial year, anywhere around INR 250-odd crores. More undercoded AUM in PMS this financial year. So PMS is another product which helps us -- which give us big motivation as 150-odd crores AUM in Q1 and the first 3 months of the launch is a big boost for us. AIF, still we are working with our regulatory things. We believe we'll be able to launch our AIF in Q3. So that will be another product well for us from our side. And so there, we also believe that results will be good, and we'll be able to get good plantage in AIF also. So -- but on the institutional side, that institution team is constantly showing good growth quarter -- every quarter, they are able to grow around 15% to 20%. So right now, after the Q1, our intuitional active plant stand at 212 versus 186 clients until Q4. So that's a 15% growth overall into the institutional business. And uTrade subscription, uTrade Algo for retail, there we have seen a 20% growth into the subscriptions. So -- and between Q4 and Q1. So uTrade is also one thing which is a unique product offering by Share India for our clients. And another business that -- new branch we started in Q1 was Share India Cred. Share India Cred was a debt trading company. So now this company is mainly into dealing debt market products, especially LCDs and all. So the great part is it started operations in Q1 only, and it is led by Mr. Keshav Goyal. So first quarter, they have done the sales of around INR [ 74 ] crores -- they have underwrite INR [ 6 74 ] crores. And they have done 6 issues and with EBITDA of INR 1.08 crores and PAT of INR 40 lakhs. So we started the operations in Q1, and the company has done a decent sales and a positive number, 40 lakhs, that's a big encouragement for us. So all departments, all divisions, which we started since last 2 to 3 years have started showing good numbers now. And we are hopeful that the way we are going, we'll be able to offer a wide range of products to all the customers. So that is what is helping us. But another silver lining is Gift City, Gift City, we started some international trading desk. Recently, it was facing some challenges, but Q1 showed very good returns. So Gift City numbers in Q1 were positive, so around INR 2-odd crores. So that's also a big encouragement for us wherever we were making some small losses, and it turned out to be a very good quarter in Gift City also. That's a big encouragement. So there is no burden on a single company now. And on the merchant banking side, again, merchant mining team is very boost up. They are doing a decent job in Q1. We did 1 IPO, which was an SME IPO, I think, around INR 200-odd crores -- so that was a big boom for us. And today, when we are speaking, we have just finished our first main board IPO and we raised around INR 167 crores. And the total orders efficient till now is more than 12x into this challenging market. Although market is good today, but in last week, market was very bad, very volatile. Still, we did a very decent job and merchant making team is doing a very good job, and we are hopeful that the coming 2, 3 quarters, we'll be able to show very good results from the merchant making team also. So all divisions, whether it is retail, PMS, wealth products and the AC team and specially Share India Cred, Gift City, they are the big boost for us in this quarter. Merchant banking, they are doing a decent job. So we are hopeful, the group is very strong, very diversified, and we are able to offer multiple products to the customers. And with the footprint on the ground, the Tier 3 cities, so we'll be able to hold on to our numbers. And as Kamlesh sir has said, we are hopeful to achieve the growth target we are expecting. So company's on very strong footing despite a lot of regulatory challenges. We believe major challenges are over now and future seems to be very good for Share India. Every team is very motivated, extremely pulled up. On the wealth side, last thing, last comment, on the wealth side, distribution -- wealth distribution team, they are already hiring. That team hiring is going on, and we'll be able -- we believe that we'll be able to start our operations by Q3 of this financial year. So going further, next 2 to 3 years, we believe that we'll be very solid and all the different revenue streams, which is extremely diversified and which gives more sustainability to us. And we hope so that this business environment is good for us. And going further, I'm very hopeful the way business Share India should do good in coming 2 to 3 years. This is from my side. So thank you very much.

Operator, you may please open for Q&A?

[Operator Instructions] The first question is from the line of [ Shavi ] from [ Trinity ] Asset Managers.

Sir, my first question is that we have a goal of opening 20 branches in about Tier 3 cities over the next [ 2 ] years. So what is the expected payback period for these branches given the ticket size and the revenue per branch would be lower in these regions?

Sachin, would you like to answer first? Then I can...

I missed the last part of the question. So I just heard that we are planning to open Tier 3 branches. So what was the last part of the question?

What could be the period by which we could be profitable.

Payback period, sir.

So I tell you, ma'am, there is a very simple science with every branch. So I can happily explain that. So our goal is 8 months, branch should be at par, Within 8 months. And the mathematics for that is every branch need to do at least 15 CR MTF book in the first 8 months. So if the branch is able to achieve a 15 CR MTF book, then branch ultimately saw generating good revenues. So first 8 months is our unit economics with every branch to rather -- in our sales which we keep it 6 months. But we have seen that if the branch manager is good, if team is good and they are able to hold on to the customer. So there is a vacuum on the ground that MTF and the Tier 3 cities and swing by the brokers is not much. Some brokers are definitely present, but they have very limited options in the Tier 3 cities, especially for MTF. So 8 months is a period for every single branch independently to get at par. And after 8 months, we start getting positive for every branch. So that is how we have tried to move, like 24 months, we are planning to open around 30 branches. So we are going like 8 branches in one tranche. So once the 8-month period is over, then again, we'll go for the 8 branches. So this is how we have spread our overall target that -- to go for the branches. So next 24 months, we are hopeful that we'll be able to open around 30 branches or 25 to 30 branches and every branch would be profitable. And if some branches are not profitable, evenly after 12 months, then there is a hard stop of at 12 months. There is no looking back. We have to stop the branch, cut the loss-making branches and continue with the profit-making branches. So every area, every geography has their own unique demand. Like if you go to Hyderabad, they do need MTF, but their quality, their asking is much different from [ Kolkata ]. Kolkata is a highly derivative-based location, where people are trading heavily into options. Their algo is not at all available. So the pocket size is big. They are trading into INR 100 crores of margin, but they are not introduced to algos at all. So what we are doing, we are meeting people, high license individuals and providing them the best of best we can do. And there, we are getting extremely good business. When we go to Hyderabad, there we need to be very careful with the MTF offerings, but their derivative business is not that great. There we have to go with a good research, cash market [indiscernible] and offer the MTF book. So every region has their own demand, own way of trading. Like if you go to [ Indor ], especially, there are -- people are investing more into IPOs and the new companies, correct? And the best part is Share India is able to take broadly all the demands by the customers. So if you put all products together, so we are hopeful that 8 months is an enough period for a branch to get profitable now.

The next question is from the line of [ Uda Patel ] from [ Rodra ] Capital.

Sir, I have a next question regarding [ to ] our low key and high growth, but the stock is not performing well in market.

Sachin, would you like to tell something on this?

Sir, see, this is a little bit of a hypothetical question. So sir, we cannot comment on the cost price and the stock performance. So its stock performance is a result of so many activities beyond business some time. So it is maybe the particular -- our industry is going through extremely heavy regulatory changes. So definitely, growth has been challenged and people are taking more time. This is a consolidation period for the industry. And last year -- last 2 years, we are struggling with these things. And our entire industry is consolidating at some excess. And once our industry overall goes into a growth trajectory, then I think it can reflect on the price, but price is a result of so many other factors, which are beyond company's control. So we cannot comment much on that part, but yes, company is very strong. Ground is strong. We were able to handle all the challenges that were coming for the industry. And we were able to diversify -- use this period to diversify into different verticals like if you see 212 institutional clients, if you see Gift City operations, merchant banking first main board IPO we completed today. And constantly, we are upgrading our scales, upgrading our business style, also expanding into different verticals. So maintaining our MTF book above -- sorry?

AIF? [indiscernible] launching AIF?

So we are planning to launch AIF as explained -- sir, hi, sir. This is Abhinav. As explained by Sachin sir earlier in his commentary, AIF is application under process, and we should be able to initiate our process in Q3 of current fiscal year.

See, there were many apprehension regarding the growth of stock from the entities, especially with respect to the regulatory changes that has happened and the tightening of F&O regulations. In addition to that, RBI also came out with guidelines for [indiscernible]. Now all this put together has created certain apprehension in the mind of investors. But if you have seen the last quarter performance, though the entire period of 3 months was marked by geopolitical conflict, still, this was one of the best quarters for the company. See, there are -- we are very quick -- even for regulatory changes, we are prepared in advance. We have very high net worth, which accommodates us with more flexibility and room for expansion. Not many small brokers are facing difficulties to meet the additional capital requirement, whereas we have planned everything in advance, including issuance of NCDs and CPs so that our business remains intact. If you see our performance compared to our peers, we have performed far, far better. And we are not dependent on one stream of revenue. We have a diversified stream of revenue. So that is helping us also -- and going forward, we feel that things are getting settled. And we are getting benefit of all the efforts that we have done, all the advanced planning that we have made. And we are in a better position to capture the market. We have also focused on the retail, and we have unique advantage of algo-trading. So that is how with the input of AI and automation, we are well placed. So we are confident. The share price will get reflected automatically based on the performance and once the market gets settled.

And sir, last question. Sir, what is the purpose of acquiring a tech company from Bombay?

Sir, are you referring to Silverleaf?

Yes.

Yes. So on Silverleaf, acquisition was announced a couple of years ago. This is a company led by [indiscernible], both IT Bombay graduates, along with [ Pikash ]. They have been in the business for more than 12 years. And they bring you on to the table not only the technology stack, but the entire HFT protocol into the Share India fold. And along with them, we are really hopeful for our geographical expansion in third-party countries apart from India as well. So it is a strategy in line with our global expansion plan apart from just being focused on India-based products, along with strengthening our technology backbone and the backpack of the current structure of the company.

[Operator Instructions] The next question is from the line of [ Rohan ] from [ Eternal ] Capital.

Can you hear me? Yes, I'm sorry. Can you hear me?

Yes.

Yes, yes, yes. Loud and clear, yes.

Yes. I think some of my question might have been answered previously, but I wanted to just understand, what were the key drivers for the good performance in the broking and trading segment despite, I think, the RBI policy and all those statements? And can you provide a split between the prop and -- prop trading and broking and the broking and trading segment in that?

Sachin, would you like to answer?