Rikhav Securitie — Q4 FY25 earnings call

Call held 15 May 2025

Management summary

Rikhav Securities Ltd. reported a consolidated total income of INR327.77 crores and a net profit of INR23.67 crores for FY25, with an EPS of INR7.51. The company faced challenges in H2 FY25 due to weakened market sentiment and SEBI regulations, leading to a significant fair valuation loss of INR33.88 crores from reclassifying investments to inventory. Despite these pressures, Rikhav launched new digital platforms and services, and plans to expand its geographical presence, aiming for stable bottom-line growth in the future.

Highlights

  • Consolidated Total Income for FY25 was INR327.77 crores.

  • Consolidated EBITDA for FY25 was INR34.50 crores, with a margin of 10.53%.

  • Consolidated Net Profit for FY25 was INR23.67 crores, with a net profit margin of 7.22%.

  • Earnings per share (EPS) for FY25 stood at INR7.51 (consolidated) and INR8 (standalone).

  • Successfully launched Margin Trading Facility (MTF) and digital platforms like Meon Aadhaar-based eKYC and Rikhav Plus app.

Concerns

  • A fair valuation loss of INR33.88 crores was recognized in the P&L due to reclassification of non-current investments to inventory.

  • Operating profit margin for the full year FY25 declined to 8% from previous levels of 50-52%.

  • Market sentiment weakened in H2 FY25, with mid-cap and SME segments declining by 20-25%.

  • Derivatives segment experienced a sharp drop in trading volumes due to recent SEBI regulatory changes.

Key financials

  1. Total Income ₹327.77 Cr
  2. EBITDA ₹34.5 Cr
  3. EBITDA Margin 10.5%
  4. Net Profit ₹23.67 Cr
  5. Net Profit Margin 7.2%
  6. EPS ₹7.51

What they filed

₹ Cr · quarterly
Line itemQ2 FY25Q4 FY25Q2 FY26Q4 FY26
Revenue93 225 380 1,596
EBITDA62 -37 19 -2
Net profit51 -27 18 1
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Guidance & targets

Profitability

  • Bottom-line Profitability · Next financial year (FY26) · Medium confidence More than FY25 numbers
    It depends on the market condition, but we are hopeful to have more than the more numbers than the '25.

    — Hitesh Lakhani

  • Bottom-line stability Profitability · Future · High confidence Stable
    No, no, bottom line will be stable. Definitely. We are taking many steps for the stable stability.

    — Hitesh Lakhani

  • Profit margin Profitability · Future · High confidence Increase
    Yes, it will definitely increase.

    — Hitesh Lakhani

What to watch in Q1 FY26

Segment-wise revenue disclosure

Next quarter
Current Not disclosed
Target To be disclosed

Why it matters

Provides greater transparency into the performance of different business lines and allows for better peer comparison.

Okay. We will take your suggestion in our record and we will try to give that. We will definitely give it next segment-wise.

Risks & concerns

  • Weakened market sentiment in mid-cap and SME segments

    high

    Market sentiment weakened considerably in H2 FY25, particularly in mid-cap and SME segments, showing a decline of nearly 20%-25%.

    Management acknowledged

  • Sharp drop in derivatives trading volumes due to SEBI regulations

    high

    The derivatives segment experienced a sharp drop in trading volumes, largely driven by recent SEBI regulatory changes.

    Management acknowledged

  • Impact of investment reclassification on reported profitability

    high

    A fair valuation loss of INR33.88 crores was recognized due to reclassification of non-current investments to inventory, materially impacting reported profitability for FY25.

    Management acknowledged

  • Decline in operating profit margin

    high

    Operating profit margin for the full year FY25 was 8%, a significant drop from previous levels of 50-52%.

    Analyst acknowledged

Q&A highlights

4 direct
Significant decline in operating profit margin for FY25 Direct
Actually, our major investment in SME segments and mid cap segments, and that segment is reduced, first time in this quarter, nearly about 25%. Actually, that loss is not booked. Only the market value of the script is reduced. So we conservatively provide that in our books. So around INR33 crores is only book loss.

Addresses the primary concern about the sharp drop in profitability and explains the impact of market conditions and accounting for valuation losses.

Asked by Ankur Jain

Reclassification of investments to inventory and its impact on financials Direct
It is just on 3rd of -- with the effect from the 3rd of October, we have converted that investment from investment to the stock. And up to 30th September, the market value of the stock is more than the cost. So, there is no need to revalue the stock. Because the market value of the stock is more than... On 3rd of October also, the market value of the stock is more than the cost. Only on March 31st, it is a decline.

Clarifies the accounting change, its effective date, and the reason for the INR33.88 crores valuation loss being recognized only at year-end.

Asked by Atul Dafria

Lack of segment-wise revenue disclosure Partial
Okay. We will take your suggestion in our record and we will try to give that. We will definitely give it next segment-wise.

Highlights a gap in financial reporting compared to peers and indicates a potential improvement in future disclosures.

Asked by Hrithik Singh

No dividend declaration despite INR8 EPS Partial
Okay, we will think over it in AGM. Before AGM. Your suggestion will be think over before AGM.

Raises a question about shareholder returns and management's capital allocation policy, indicating a decision pending at the AGM.

Asked by Ashok Shah

Automated risk management system performance under market stress Direct
If you ask about risk management purposes, then we have certain risk management performance in the system of a multilevel producer system where we have a single software which is ODIN on which there is a client side RMS policy that we have defined upon which there is an overall N Prime software which is there that we have implemented to get an overall view of the whole clientele as well as prop. And third would be in case if there is a, what do you say, default or let's say it exceeds the margin limits or so, the auto stop of the trading and everything happens automatically. That is already there.

Provides insight into the company's risk management infrastructure and its ability to handle market volatility, which is crucial in financial services.

Asked by Shreyas Ahuja

UI/UX of the Rikhav app compared to competitors (Angel One, Zerodha) Direct
Like graphs, proper and dark. Like dark mode is coming in every app these days. So, dark mode should also be included. ... Okay, black mode you are saying. ... I think there is a setting in which you could turn it off and change it to black mode already.

Indicates areas for improvement in the company's digital offerings based on user feedback and competitive landscape, showing responsiveness to client needs.

Asked by Hrithik Singh

3 min read 6 chapters

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.

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