Share India Securities Limited (SHAREINDIA) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the Q1FI27 Earnings Conference Call of Share India Security Summit, hosted by Valerium Advisors. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Pravangi Jain from Valoram 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 Pravangi Jain from Valoram 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 risk 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. Kamleshita to start with his opening remarks. Thank you, and over to you, sir.

Yeah, thank you, Purwangi, madam. Good afternoon, everyone. Thank you for joining us today for Share India's earning presentation for the first quarter of financial year 2026-27. 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 derivative segment and tighter funding norms prescribed by Reserve Bank of India for top desk trading. 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. The operation increased by 28% year-on-year basis to 349 crores. Operation increased by 31% year-on-year business to... Thank you. Thank you. Classification has allowed us to remain resilient even during the period of regulatory transition. Our financial position continues. On 30th June 2026, our network stood at approximately 2,760. Providing us with. To further strengthen our funding profile, we have initiated commercial paper program backed by the highest short-term rating of CRYSL A1+. In addition, we are progressing with the issuance of non-convertible dementia program. This 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. Thank you. Thank you. Diversified funding framework. Current sources, we have bank borrowing. Retaining companies.

Thank you for joining the call. We are very confident despite all the challenges from the regulatory side, we are confident that we will keep on growing in this challenging environment. And as we all know, our focus is always, since last two, three 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 step where we stand in terms of all the offerings and what are our future plans. Luxshare India's core focus is into retail, now offline retail, and we are constantly opening our new branches into archery cities mainly, and the focus is to expand our MTF book and retail footprints into these cities, and offering not only the broking, but all the wealth products to all the customers at the ground level. So, recently we have opened six branches, mainly into Banaras, Indore, Bhopal, Raipur, Agra, and Nagpur. So Hyderabad also, seven branches we have recently opened, and it's a mix of south and, you know, it focuses not on north only because we are already having a good presence in north. So we are hopeful that, you know, as we targeted 30 branches in the next two years, seven are already operational. Once these branches start showing positive results, then we'll again continue, you know, our journey with the... With the branches on the retail side at the tier 3 cities. So, retail business is showing good results, and as empty of books stands, around 470-odd quotes at the end of Q1. So, despite the extreme volatility due to international factors, markets... Especially mid-cap, small-cap stocks are extremely volatile. Still, we are able to hold on to our MTF numbers, and they are showing mild growth. So, 470 crore is the number. By next two years, our target is 4,000 codebook we are targeting in next two 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 pour-offs and derivative side and everywhere. So retail side, MTF is at 470 crores. We launched our PMS in Q1, and at the end of Q1, our PMS AUM, in the direct PMS and advisory stands at 150 crores. That's a very decent number as the PMS was launched in Q1 only, and target by end of financial year, anywhere around 250 odd crores. More under code AUM in PMS, this financial year. So PMS is another product, you know, which helps us, which gave us big motivation as 150-hour code AUM in Q1 in the first three months of the launch. It's a big boost for us. AIF, still, we are working with the regulatory things. We believe we'll be able to launch our AIF in Q3. So that will be another product, a wealth product from our side. And we also believe that results will be good and we'll be able to get good advantage in AIF also. So, but on the institutional side, that institution team is constantly showing, you know, good growth. Every quarter, they are able to, you know, grow around 15 to 20%. So, right now, after the Q1, our institutional active clients stand at 212 versus 186 clients until Q4. So that's a 15% growth overall into the institutional business. And U-Trade subscriptions, U-Trade is our algo strategy for retail. There we have seen a 20% growth into the subscriptions. So, between Q4 and Q1. So, U-Trade is also one thing which is a unique product offering by ShareIndia for our clients. And another business that a 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 NCDs 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 74 crores. They have under IT 74 crores. And they have done six issues and with EBITDA of 1.08 crores and fat of 40 lakhs. 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 two to three years, have started showing good. And we are hopeful, you know, the way we are going will be able to offer, you know, 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 two odds growth. 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 banking team is very, you know, boost up. They are doing decent job. In Q1, we did one IPO, which was an SME IPO, I think around 200 odd crores. So that was a big boost for us. And today when we are speaking, we have just finished our first mainboard IPO and we raised around 167 crores. Until now, it's more than 12 times 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 coming two, three quarters, we'll be able to show very good results from the merchant making team also. So, all divisions, whether it is retail, PMS, air, wealth for us, and... All the AC team and especially ShareIndia Connect, Gift City, they are the, you know, big boost for us in this quarter. Much and I think they are doing a decent job. So we are hopeful, you know, the grip is very strong, very diversified, and we are able to offer multiple products to the customers. And with the footprints on the ground, with the Thai-3 cities, so we'll be able to, you know, hold on to our numbers, and as the Kamles have said, we are hopeful to achieve the growth target we are expecting. So, companies on very strong footing, despite a lot of regulatory challenges, we believe, you know, major challenges are over now, and future seems to be very good for ShareIndia. Every team is very, you know, motivated, extremely pulled up. On the wealth side, last thing, last comment, on the wealth side, distribution, wealth distribution team, they are already hiring, the team hiring is going on, and we believe that we'll be able to start out. operations by Q3 of the financial year. So, going further, next two to three years, we believe that we'll be very solid in all the different revenue streams, which is extremely diversified and which gives more sustainability to us. And we hope so that, you know, this business environment is good for us. And going further, I'm very hopeful, you know, the way businesses share India should do good in coming two to three years. This is from my side, sir. Thank you very much.

Operator, you may please open for Q&A.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. For participants who wishes to ask a question, may please press star and 1 at this time. The first question is from the line of Shubhi from three Nidra Asset managers. Please proceed.

Good afternoon, sir. Sir, my first question is that we have a goal of opening 30 branches in about tier 3 cities over the next few years. So what is the expected payback period for these branches given the ticket size and the renewable branch would be lower in these regions?

Sachin, would you like to answer first, then, you know, I can...

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

Sorry? What could be the period by which, you know, we could be profitable?

Payback period.

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 eight months branch should be at par, within eight months, and the mathematics for that is every branch needs to do at least. 15 CR MTF book in the first eight months. So if the branch is able to achieve 15 CR MTF book, then branch automatically starts generating good revenues. So first eight months is a unit economics with every branch. So rather, you know, in a sales pitch, we keep it six months. But we have seen that if the branch manager is good, if team is good, and they're able to hold on to the, you know, customer. So there is a vacuum on the ground that's empty. In the type of cities, and spring by the brokers is not much. Some brokers are definitely, you know, present, but they have very limited options in the type of cities, especially for MTA. So, eight months is a period for every single branch independently to get at par, and after eight months, we start, you know, getting positive for every branch. So, this is how we have started to move ahead. Like, 24 months, we are planning to open around 30 branches. So, we are going, like, eight branches in one branch. So, once the eight-month period is over, then again, we'll go for the eight branches. So, this is how we have spread our, you know, overall target that... You know... So, next 24 months, we are hopeful that we will be able to open around 30 branches, 25 to 30 branches, and every branch should be profitable. And if some branches are not profitable, even after 12 months, then there is a hard stop after 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, you know, if you go to Hyderabad, they do need NTF, but their quality, they are asking, is much different from, you know, from Calcutta. So, Calcutta is a highly derivative-based location where people are trading heavily into options. Their algo is not at all available. So, their pocket size is big. They are trading into 100% of margin, but they are not introduced to algos at all. So, what we are doing, we are meeting people, high net worth individuals, and providing them the best of tech 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 the good research, cash market, Mr. Knox, and offer the NTF book. So every region has their own demand, own way of trading. Like if you go to Indore, especially, people are investing more into IPOs and the new companies, correct? And the best part is ShareIndia is able to take care broadly all the demands by the customers. So if we put all products together, so we are hopeful that eight months is a good enough period for a branch to get profitable now.

Okay, sir. Thank you. This is very helpful. Thank you.

Thank you. The next question is from the line of Uja Patel from Rudra Capital. Please proceed. Hello. Hello. Yes, Uja, you can go ahead.

Sir, I have one question regarding to our low E and high growth. But the stock is not performing well in market. Would you like to tell something about this?

Sir, see, this is a little bit of a hypothetical question. So, sir, we cannot comment on the stock price and the stock performance. So, stock performance is a result of so many activities. It's beyond business sometimes. So, it is maybe, you know, 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 since last two years, we are struggling with these things. And the entire industry is consolidating at some extent. And once the industry overall goes into a growth trajectory, then... Then I think, you know, it can affect the price. But price is a result of, you know, 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, you know, handle all the challenges that were coming for the industry. And we were able to diversify, use this period to diversify into different vertical flights. If you see 212 institutional clients, if you see gift city operations, merchant banking, first main board IPO will be completed today, and constantly we are upgrading our scales, upgrading our business style, also expanding into different verticals. So, maintaining our MPF book above for... Sorry?

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

Okay.

Okay. Thank you.

See, there were many apprehensions regarding the growth of strong-spoken entities. Specially with respect to the regulatory changes that has happened and the tightening of F&O regulations. In addition to that, you know, RBI also came out with a guideline for PropDest funding. Now, all this put together, you know, has created certain apprehension in the mind of investors. Do the entire... Three months was marked by geopolitics. One of the best quarters for the company. See, there are, we are very quick. Market gets available.

Thank you. Cellular Leap acquisition was announced a couple of years ago. This is a company led by Pew, Gananje, both IIT Bombay graduates, along with Prakash. They have been in the business for more than 12 years, and they bring it onto the table, not only the technology stack, but the entire HFT protocol into the Shere India port. And along with them, we are really hopeful for our geographical expansion in third-party countries. So it is a strategy in line with our global expansion plans, apart from just being focused on India-based products, along with strengthening our technology backbone and the backstack.

Thank you. Before we take the next question, we would like to remind participants that you may press star and one to ask a question. Participants who wishes to ask a question may press star and one now. The next question is from the line of Rohan from Eternal Capital. Please proceed. Mr. Rohan, your line has been unmuted. Can you hear me?

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

Yes.

Yeah, yeah, yeah. I think some of my questions 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 trading and broking and the broking and trading segment in that? Sachin, would you like to answer?

Let Abhinav start, I will follow.

Sure, sure, sure. So, thanks a lot for this query, sir. I think as we have been continuously reporting, you know, even in this call, we have said that there have been a certain amount of regulatory headwinds that has been in this industry for the last couple of years. And specifically from last couple of quarters. And during this transformation, what we have been able to do, we have been able to diversify ourselves into multiple business streams. Along with the background, we have been able to change the basic drivers from primarily being a transaction-based business to being more of a lending-based business. So, what I mean by that is now we have a very significant amount of MTF book, which is around 465 odd crore. So, there is a significant amount of interest income that comes accrue because of this on our income statement, which has a very significant... And a direct impact on our bottom line. Along with it, all the transactional-based businesses, as we go and penetrate into PO3 branches, we open new branches, we engage with new customers, the rub-off effect of multiple transaction-based businesses also keep showing, which add on to our top line without a very significant cost being associated with them. And as I explained earlier, all the costs associated with this expansion have already been included in the P&M. The impact of any revenue growth that we derive from these businesses is very significantly visible on the bottom line. So this is what the drivers are. Essentially, the cash segment is doing really well in current segment, which is being driven by not only the transmission-based business, along with it, the MTF book. Also, the diversification into multiple products, whether that be PMS or mutual fund distributions or any third-party distribution or any other kind of product are also adding out to the bottom line. In terms of distribution, our current prop to distribution is in what has been our average of around 52% is from prop and around 48%.

I would like to add here, if you look at the numbers, so all the subsidies have shown very good results, that not only the parent company, they are not depending on the parent company only. So if you look at ShareIndia Algo Plus, they have given very good numbers. If you look at IFSC, again, that company was into losses, they have shown good results. ShareIndia FinCap, their numbers have improved. ShareIndia Capital Services, their numbers have gone up. So, all these subsidiaries contributed really well, and even in ShareIndia, for parent company, retail per se, business revenues have gone up, and interest income has got stabilized and other things. So, putting all things together, so, yes, definitely some impact of the valuation. You know, in quarter four, there was a negative impact on the valuations, but still, you know, the valuations number was not that great, but some positive impact at least. So putting all these things together this quarter was very good for us, and it will be able to hold on the same performance by the subsidiaries. It will be a great support for the parent company, and going further, we believe ShareIndia will keep, you know, this flow maintained for the coming quarters.

I would like to add a few points here so that it can benefit all the investors. The realization during the quarter has improved a lot. I'm in a position to maintain the market share because of the advanced planning and preparedness. Margin. It's a great compared to our peers. I find it difficult. service their client, and with the kind of technology background you Thank you. If the data period was marked by geopolitical conflict, we could, you know, deliver the best result possible, and going forward also, we are confident.

Thank you. The next question is on the line of Chirak Saizal from First Water Fund. Please proceed.

Hi, thanks for the opportunity. Just a question on this Einstein acquisition that you have made. So, you have mentioned concentration of up to 45 crores. I didn't understand why up to 45 crores. Is it yet to be determined, the acquisition value? And secondly, if I look at the numbers, the last three years, Now,

see, they have property. See, basically, the idea of acquiring this property, Thank you. idea and This is the main reason for acquiring the company. This will give us... It is in the cockpit area, and it is in the prime location. Thank you. Thank you. And, you know, better One place, if you have all the people sitting, that will enhance the efficiency and productivity of our employees also. The valuations are very, very, very, very reasonable. For 18,000 square feet area, carpet area in Mumbai, for 42 crores, you can work out what could be the cost. He was an advantage. The entire idea was to acquire this company because... The development was done by Kahir Aheja, and, you know, Offices were distributed both through With this company, the property comes. I hope this will clarify your query.

So, second question is on the, you know, the growth in the broking and trading segment.

In terms of profitability, not in terms of revenue.

We are moving towards more of clientele business with the help of all the products that are available, including PMA, CIF, retail, algo trading, and more focus is on retail. The volume being done by clientele business, and 40% through... And I'm so excited. We have a complete product portfolio, so we can offer everything. We are very good. We have a very good team. We should do. We can have our footprint in the wealth market also. So, these are the, you know, vision of the management. Sustainability of business. Sachin, you would like to add something here?

I think Abhinav was saying something.

Yes, so I think I have explained by it. When we say 50 to 50% approximately has contributed to the prop, it is in terms of the profitability. In terms of revenue, of course, those numbers can have a different point of view, given that prop business might have more turnover-based transactions rather than PST.

How much is it as a percentage of revenues?

So in terms of percentage of revenue, it would be slightly higher. It would be approximately 60% if I have to give a ballpark figure. It would be around 58% to 60% as well.

So, you know, when I look at, let's say, eight, nine years ago, split of crop and client business, and when I look at the crop share in the total revenue impact, it used to be, you know, 60% of the revenue is in, say, 70%. Definitely it has come down, but it has not come down. The dependency is still very high on the crop book as a percentage of a total top-level impact.

I'm sorry to cut you off on this. Eight, nine years ago. 70-75% of our profitability. It has never been, I mean, so even pre-COVID, we used to contribute around, business used to be 85% dependent on propriety in terms of revenue, and around 70-75% in terms of profitability. And as explained in our earlier calls as well, we have been constantly trying to reduce our dependence on propriety. We're trying to reduce our dependence, but all the other businesses are growing much faster than what we're trying to do.

Thank you. One more point here. Please also try to note that, you know, the size of the business has grown up multiple times since last seven, eight years, especially after COVID. And we are, even after that, we are able to increase our customer-based services here in revenue and part, like, drastically high. So, as Abhinav said, eight years ago, it should be around 85 to 90 percent. Which is around 60%, even after the size has gone up, like, multiple times. So, that's because, you know, constant effort and new revenue change, so you keep on. So, you can easily figure out the number of branches, five years back, number of branches now, no PMS, no wealth team. No State India Credit, NCD, no Merchant Banking, nothing, correct? So, all these efforts have been done in the last three to four years, and they all are showing good results.

See, we have some unique advantage of algo trading. So, we have algo for the retail investors. In addition to that, you know, we have our own technology platform called Teclon. So, on technology front, you know, we have managed very well. Even acquisition of Silverleaf, you know, which is HFT firm, has added our strength in terms of technology and delivery. So, we have certain unique advantages. And, you know, we are basically a strategy-based...

Thank you very much. Due to time constraints, that was the last question. I would now like to hand the call over to the management for the closing comments. Over to you, sir.

Thank you. Thank you all the stakeholders to have participated in this meeting. Indeed, the questions that were asked during the session were very interesting, and it has given us a lot of opportunity to explain. Not only what we are doing right now, but also, you know, it is given an opportunity to explain our future plan and the way we are likely to move ahead in the market and maintain our market share as well as.

That concludes this conference. Thank you for joining us, and you may now disconnect your lines.