Q2 25/26

Nov 10, 2025

Summary

Q2 revenue fell 8% YoY and operational PBT fell nearly 20%, with retail equities pressured by F&O regulation. Distribution and institutional income grew YoY; wealth expansion remains an investment phase, with profitability targeted over 2–3 years.

Please note that this conference is being recorded. I now hand the conference over to the management for the opening remarks. Thank you, and over to you, sir. Thank you. Good afternoon, and welcome to the second quarter FY 2026 analyst call of IIFL Capital. I am R. Venkataraman, I am the Managing Director, and along with me is Ronak Gandhi, who is our CFO. First and foremost, India's economy has continued to demonstrate resilience and strength in spite of facing global trade tensions and higher tariffs imposed by USA. Fortunately, GST reforms, festive season spending and incipient revival in both manufacturing and services have supported steady economic growth. Looking ahead, we think second half for FY 2026 will be better and that is supported by policy stability, demand growth, lower GST rates spurring consumption and also a benign liquidity environment. Coming to our results, consolidated revenue from operations for the quarter stood at INR 592 crores, down 4% quarter-on-quarter and 8% year-on-year. Coming to quarter-on-quarter basis, retail equities was at about INR 271 crores for this quarter versus INR 264 crores for the Q1 FY 2026, which is up marginally 3%. Institutional income, which comprises both broking and investment banking, has decreased 9% and it is now standing at INR 186 crores versus about INR 204 crores for the previous quarter. Financial product distribution income has decreased 10%, it is now at INR 130 crores versus INR 145 crores for the previous quarter, and that is because of certain transaction income which was lower in this quarter. There is a hit on our MTM investment, and that is primarily because of price reduction on the BSE shares, which materialized in the previous quarter. Employee cost has decreased from INR 176 crores to INR 150 crores in this quarter, basically because of lower provision for variable pay in this quarter. Depreciation has decreased marginally by 7%. Fees and commission increase has decreased 12%, INR 134 crores versus INR 119 crores in the previous quarter, which is in line with the revenue trends. Admin expense was flat at INR 87 crores. Operational PBT, which is before other income and MTM income, is at about INR 160 crore, which is flat on a quarter-on-quarter basis. Coming to year-on-year basis, retail equities income was INR 271 crores, in Q2 FY 2026, versus INR 356 crores Q2 FY 2025, a decline of 24%. And this decline is primarily on account of the new regulatory norms on F&O trading. Institutional income has increased 5%, INR 186 crores versus INR 177 crores in the same quarter last year. FPD income has increased 22%, INR 130 versus INR 106 because of increased focus on distribution products and income. Employee cost increased 3%, INR 149 crores to INR 150 crores. Depreciation has increased 13%, from INR 13 crores to INR 15 crores. Fees and commission income has decreased 17% to INR 142 crores to INR 119 crores. Again, in line with the revenues. Admin income was flat. Operating PBT is at INR 160 crores before MTM, and that is a decline of almost 20% year-on-year basis. Coming to some housekeeping numbers. Our average daily turnover was 263,568 crores, which is a split of F&O at 260,956 crores, and cash was INR 2,600 crores approximately in the quarter that went by. Compared to 223,232 crores, of which F&O was 220,263 crores and cash was about INR 2,968 crores. Basically there was an increase in average daily turnover in Q2 versus Q1, and that was primarily because of increase in F&O. If you compare with the quarter last year, same quarter last year, FY 2025, that quarter we had a turnover of 332,186 crores, which was about 328,728 crores in F&O and INR 3,450 crores in cash, which was a decline of almost 21%-22%. If you look at our market share consequently, our market share after adjusting for our market share, if you consider overall market share, that is basically unchanged at about 0.64%, which is about cash market of about 2.52%-2.55%, and F&O was about 6.64% to 0.62%. But the good news is that if you remove non-prop, because we believe that the large segment of prop which is not addressed by us, then non-prop market share, we have seen an increase in both F&O as well as cash. Now cash is about 3.87% and F&O is about 2.65%. The other number is about our cross-sell assets because we are seeing growth in our cross-sell assets. Currently, cross-sell assets stands at about INR 44,000 crores, which is 60% is ARR and 40% is non-ARR. ARR assets is mutual fund PMS and AIF, which is now standing at about INR 27,000 crores. With this we are open for any questions that you may have. Thank you so much. Thank you very much. Ladies and gentlemen, we will now begin with the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use headsets while asking a question. Mostly- Ladies and gentlemen, we will wait for a moment while the question queue assembles. Ladies and gentlemen, anyone who wishes to ask a question may press star and one on their touchtone telephone. Our first question comes from the line of Prayesh Jain from Motilal Oswal. Please go ahead. Yeah. Hi. Good afternoon, sir. How are you? Good afternoon, Prayesh. How are you? All good, sir. Sir, first question is on this SEBI consultation paper that spoke about brokerages going down sharply from 12 bps to 2 bps. Obviously, there has been some media talks around it that the regulator might consider increasing that lower limit of 2 basis points. Either way, what could be the impact that we could see on our earnings because of that? See, if you look at this discussion paper is yet to become a law. But as you said, there has been media reports that the 2 basis point might also see some increase. On the institutional sector, a bulk of our brokerage comes from foreign institutional investors and where the capping is not applicable. Mutual funds, however, are still a significant player on this. If there is a reduction in the brokerage charge, then there will be an impact on our income. But at this point in time, it is very difficult to ascertain exactly what will be the impact. But for sure, if the brokerage falls under the cap, then there will be an impact. Sir, can you share some insight into what is the share of revenues of domestic mutual funds in your institutional equities revenue? Unfortunately, I am not able to share that details with you. Sure, sir. No worries. Sir, the other question was on the distribution income that has seen a sequential drop. Ideally in this quarter, unless it is insurance-related, which could have possibly impacted by GST rates, but financial product distribution revenue sequentially has gone down. What would be- Yes. Sequentially, income has gone down by almost 10%. It was what? We had some NCD issuance in the previous quarter and other such products where we had some upfront income. That is the reason for this decline. Okay. And sir, how is the wealth management business shaping up? How many RMs have you hired so far and- Actually, to be honest, I think last time also the same question was asked. Right. As of now, we are roughly about 50, 55 RMs, in that range. This quarter, we have not seen some significant increase in the RM. It is virtually flat. The business is shaping up well and we are seeing some assets coming, relationships happening. As of now, if you ask me, I am happy with the state of the progress of the wealth business. Additionally, what is also happening is that as a rub-off effect, our own existing 450 RMs which are there, our broking business have also started slowly upgrading and focusing on getting more cross-sell assets, and that is evident in the fact that our cross-sell assets has reached about INR 45,000 crores. INR 44,000 crores. Right. Sir, how many RMs are there on your retail business, and how many of them are worth upgrading to a wealth RM? Our aim, we have about 450 RMs in that, and we hope that a bulk of them will get upgraded. Okay. And sir, these 50, 55 RMs that you've added, these would be RMs of high caliber and income and that his salary level supports a INR 50 lakhs, or it's more in that INR 15 lakh-INR 20 lakh range? What kind of RMs are? These will be the affluent and HNI RMs, so their salary will be higher. Okay. Got that. Any data that you want to share with respect to, apart from the AUM data that you've mentioned, any number of families, incremental number of families that you've been able to onboard in this first half? Actually, once this business scales up, maybe after two, three quarters, we'll share more details. Got that. And sir, last question on the broking business. We've seen a very strong uptick in volumes in October, and all these talks about regulations on the F&O side have mellowed down both by the FM as well as the government. Do you think that the run rate, what you've seen in October, can be sustained going ahead? If there are no further or any major regulations, how should we kind of see? I know it's a crystal ball gazing, but any thoughts of yours would be helpful. Right. You rightly pointed out it's a crystal ball gazing. As of now, there's no clarity about what will happen. Although, like you said, we are getting different signals from the regulators and the powers to be. But having said that, I think one should not look at on a quarter on quarter basis or not, et cetera, because India is still an under-penetrated market. So we think that as the Indian economy goes from INR 4 trillion to maybe INR 6 trillion, INR 8 trillion in the next 10, 15 years, so there will be a secular increase in equities volumes. If you have a long-term perspective, then the trend is clearly upward sloping. Sorry, sir. Just one last question. Any breakup of revenue between F&O and cash that you can share on the broking side? Actually, our broking business, roughly it is about 60/40. 60/40? Sixty/forty. It will be broadly in the 60/40 range. 60 cash and 40. One second. 60 F&O and 40 cash. Thank you so much. Thank you. Thank you, sir. Our next question comes from the line of Harsha from HSBC AMC. Please go ahead. Yeah. Hey. Hi. Thanks for the opportunity. Just few questions. One, carrying forward from Prayesh's question on wealth management. From a business perspective, if you look at our existing business, in this first half, we have done around INR 1,200 crore of revenue. Again, not trying to understand anything from a quarter-to-quarter perspective, but over the course of, let's say, next two or three years, what is the contribution you think that our distribution or wealth management business can do to our overall IIFL Capital as it stands now? See, we hope that over the next maybe two to three years, this business will become profitable. As of now, we have to continue to invest and build this up. It will be a big crystal gazing part on my part to give an exact number. But we are quite optimistic because we think that asset gathering and getting ARR revenue is the way to go. As I mentioned to you earlier also, that our focus is to get assets. So we are at about INR 45,000 crores of assets, out of which INR 27,000 crores of assets in mutual fund IIFL PMS, and our aim is to grow that component. What portion of this INR 44,000 crore incrementally has been onboarded by the new team that you hired in the last one or two years? See, basically, I think my So on an incremental basis, difficult to say which, because what has happened is that after the new team has joined, both existing team and the new team have been focused on getting ARR assets. It is a combination and synergetic effects of both. As I told Prayesh also earlier, once the business scales up, then we will be sharing more details on channels. Understood. In the retail business, I just have one or two data questions. Retail business that you have reported, what is the breakup in retail broking and the interest income that you earn on the MTF book? Our MTF book is roughly about INR 1,500 crores. How much is the interest? That breakup we have already given. You can see that breakup in page number- One second, I will just tell you. Okay. So the INR 105 crore will be the interest income and, I think INR 160 crore will be the retail broking. Is it correct? More or less, that is correct. Yes. Yeah. Okay. That is one part. Just last thing is from me, I understand that this is a long gestation period. We have seen this with other wealth companies also. Once they start making money, they make a lot of money. Just to understand current context, how much investment that you have done in this new wealth business in this financial year? See, in this financial, if you look at investment, basically manpower cost is the biggest investment, and we have invested. As of now, last year, we made a loss of about INR 20-24 crores, and this year, for the first half, we have lost about INR 20-25 crores. Understood. Okay. You have intensified investments in this year. Yeah. Because recruiting RM is becoming a big challenge because of competitive pressure. We are being prudent. Understood. Okay. That's it from my end. Thank you and all the best. Thank you so much. Thank you. Ladies and gentlemen, anyone who wishes to ask a question may press star and 1 on their touch-tone telephone. Our next question come from the line of Aditya Bhatia from Electrum Capital. Please go ahead. Hi. Thank you for the opportunity. Could I just get the spread between the IE and IB revenue, please? Thank you. On the total institutional income, which is about INR 186 crores, it will be roughly about I think it is like, one second. Is it still 60/40? I think 60/40 is correct. Okay. One second. Having said that, I want to give you a caveat because in some quarters, if there are large number of deals that get closed, then the IB component might increase. But broadly, what you say is correct. Mm-hmm. Okay. Understood. And I see that you haven't added any RMs this quarter, but any plans for the rest of the year for H2? See, as I mentioned earlier note, what is happening is that there is a huge competitive intensity in the recruitment of RMs. What we could basically, as a part of our prudent strategy, we decided that it's better to upgrade our existing RMs, train them and empower them instead of going out and acquiring RMs at any cost. So we are being prudent. Okay. Understood. And would that be a better cost efficiency in the long term despite- Yeah. Okay. Understood. Okay. That's all from me. Thank you. Thank you. Thank you, sir. Our next question comes from the line of Prayesh Jain from Motilal Oswal. Please go ahead. Yeah. Thank you for the follow-up again. Just extending this wealth management as a strategy, long-term strategy, you rightly mentioned about the competition intensity in the RM hiring. How would you position yourselves in terms of whether expanding into the top 10 cities or look at tier. Because IIFL as a brand has a very strong presence in lower tier cities as well. Do you think that will be more of a prudent strategy to expand or more on the tier 2, tier 3 cities, and what are your thoughts there? See, to be very honest, as you said, IIFL is a very strong brand when it comes to broking space. As of now, thanks to our broking business, we are present in a large number of towns and cities. So wherever we have an existing broking presence, I think the best plan should be to upgrade ourselves and make sure that we address the market there. I think it is wrong on my part to say, no, we will be focusing only on tier 2, tier 3, but we are focusing on all the cities where IIFL is present. Okay. Sir, one question was on financial statements. Your mark-to-market investments was INR 44 crores, and of a negative in this quarter. This is pertaining to BSE share or what is it pertaining to? It is pertaining to both BSE shares and NSE shares. We have bought some NSE shares for ourselves, so for that, we are taking some hit. Okay. And they will still continue to hold them or? Yes, we continue to hold them. Continue to hold them. Okay, got that. Sir, any guidance in terms of how should we look at your overall costs panning out for FY26 with regards to employee costs as well as the other OPEX? See, actually, my view is that hopefully from second half, as you pointed out earlier also, our exchange volumes have picked up, so we should see some benefit in the cost-to-income ratio. But on the long term, our view is that this year we continue to invest in the wealth business. So that is obviously affecting our cost-to-income ratio. Okay. Sir, how much comfort does the balance sheet provide you to scale up the margin trade funding book? See, as of now, our total net worth is about INR 2,800 crores. Isn't it INR 2,800? ₹2,800. INR 2,800 crores. Our margin funding book is only INR 1,500 crores. We think that there is enough scope for us to do. That will increase based on the specific borrowing we do. Okay. Your headroom is another INR 2,000 odd crores on the current balance sheet itself? It will increase based on the specific borrowing. You can take 50% of the net worth and 50% from the specific borrowing. The more we do specific borrowing, we can increase this book. Okay. And sir- To answer your question, I think another INR 1,000 crores can be added very easily. Got it. Sir, there are some external managers that you mentioned in your presentation. I am understanding these would be on the mutual fund distribution side and the business model that you are building up. Yes. They will be both mutual fund distributor as well as a broker network. Okay. What is the kind of sharing you do with these guys on the mutual fund distribution as well as broking? Is it 70% or more than that? Bhayesh, you know that business because it's a highly competitive market. Right. We are aligned with the market, and there will be significant sharing with the distributor. Got it. Thank you so much, sir. Yeah. Thank you so much. Thank you. Our next question come from the line of Lalit Deo from Equirus Securities. Please go ahead. Yeah, good afternoon, sir. Two questions. Firstly, on the distribution income. Could you also just give us the split between recurring revenues and the TBR, transactional revenues, for this quarter as well as the one ahead? If you look at it now, mostly what is happening is that, as I mentioned earlier, INR 44,000 crores, roughly 60 is ARR and 40 is non-ARR. So income will also be broadening in the same range. Correct? Yes. And sir, just on the investment banking piece. If we look at it like, given with the IIFL, we have a strong IPO pipeline. Just wanted to understand, how should one look at this overall investment banking revenues for this year as well as the next years, given the pipeline which we have? Basically, what is happening is that we are quite optimistic about the deal pipeline, and there are various deals in the various stages of completion. I am quite optimistic. Although it is very difficult for me to give an exact number on how many deals will or will not happen. Got you. Sure, sure. Yeah. Thank you. Thank you, sir. Ladies and gentlemen, anyone who wishes to ask a question may press star and one on their touch-tone telephone. Our next question come from the line of Harsha from HSBC AMC. Please go ahead. Yeah. Just one thing on the wealth part. Last year, you were doing quite a bit of building also with respect to tech product. This year, almost everything is built, right? You just need to train the RMs and then just go tell them to get clients and get the AUM, which is, of course, the most difficult part. Yes. But from a back-end perspective, that's the most difficult. But from a back-end product and tech perspective, is everything ready? Yeah. From the back-end perspective, I think we have done quite a lot of work. So we have implemented wealth tech on software. We have invested in a lot of reporting software. We have upgraded our trading software to Omnesys. So we have done a lot of work, but the most difficult thing is going out and getting assets. Yeah. Okay. So from platform tech, everything is ready. I think platform tech, I would say not everything, maybe 20% will be there. Okay. Good enough. Just one clarification. In the presentation, we have written M to M on investments and other sides a INR 44 crore loss. But in the reported result, it is a INR 25 crore loss. What is the difference in that? No, I think that will be because of NSE shares. I will ask and give you the exact answer. Okay. That is it from my end. Thank you. Thank you. Thank you, sir. Ladies and gentlemen, anyone who wishes to ask a question may press star and one on their touch-tone telephone. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Ladies and gentlemen, just a gentle reminder, anyone who wishes to ask a question may press star and one on their touch-tone telephone. Sir, thank you so much. If you have any further questions, please feel free to reach out to me or Robert directly, and we will be there to answer any question that you may have. Thank you. As there are no further questions for the participant, I would like to hand the conference over to the management for the closing comments. Thank you so much for joining us. If you have any further questions, please feel free to reach out to us, and we will be more than willing to answer. Thank you so much and have a nice day. Thank you so much, sir. Ladies and gentlemen, on behalf of IIFL Capital Services Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.