Detailed Narrative
H2 FY25 Performance and Market Challenges
The second half of FY25 presented significant challenges for Rikhav Securities, with market sentiment weakening considerably, particularly in the mid-cap and SME segments, which saw a decline of 20-25%. Additionally, the derivatives segment experienced a sharp drop in trading volumes due to recent SEBI regulatory changes. These external headwinds🌐, combined with an internal strategic shift, impacted the company's financial performance, leading to an operating profit margin of 8% for the full year, down from historical levels of 50-52%.
Strategic Reclassification of Investments
Rikhav Securities undertook a significant strategic shift by reclassifying certain equity shares from non-current investments (valued at cost) to inventory (valued at fair market value) with effect from October 3, 2024. This change, made for income-tax benefit purposes and to align with dynamic trading intentions, resulted in a fair valuation loss of INR33.88 crores as of March 31, 2025, which was recognized in the profit and loss account. Management clarified that on October 3, 2024, the market value was higher than the cost, and the decline occurred by year-end.
Digital Initiatives and Client Engagement
The company has made significant strides in digitalizing its client onboarding and trading infrastructure. Key initiatives include the launch of the Meon Aadhaar-based eKYC platform for simplified customer onboarding and the Rikhav Plus mobile trading app, available on Android and iOS. These platforms aim to strengthen the brand's digital presence, enhance user experience, and facilitate smart investing. Client satisfaction with eKYC is noted, and offline clients are transitioning to online mediums.
Expansion and New Business Lines
Rikhav Securities is actively expanding its operations beyond Maharashtra and Gujarat. The company has started four new business lines, including Margin Trading Facility (MTF) for clients and institutional brokerage. They are also focusing on algo trading for both prop and client desks and have upgraded their local servers to co-location servers for better service delivery. Marketing efforts, including digital campaigns and branch relations with CA firms, are planned for the second half of the year to attract new clients.
Market Making and Proprietary Trading
Market making constitutes approximately 50% of the company's total business. The selection of new issues for market making is based on factors like merchant maker reputation, past experience, company projections, and visits. The proprietary trading division deploys capital using algorithmic strategies, delta hedging, and arbitrage models, supported by an automated risk management system that includes auto-stop mechanisms for margin limits and defaults. As of March 31, 2025, the post value of shares held was INR145 crores, with a market value of INR116 crores.
Financial Performance Overview for FY25
On a consolidated basis for FY25, Rikhav Securities reported a total income of INR327.77 crores. EBITDA stood at INR34.50 crores, reflecting an EBITDA margin of 10.53%. Net profit for the year was INR23.67 crores, resulting in a net profit margin of 7.22%. Earnings per share (EPS) on a consolidated basis was INR7.51. On a standalone basis, total income was INR327.87 crores, EBITDA was INR34.88 crores (10.64% margin), and profit after tax was INR23.93 crores (7.30% margin), with an EPS of approximately INR8.