Rikhav Securities: FY26 scale-up, but profitability stayed under pressure

Rikhav Securities Limited, a diversified Indian stock-market services firm listed on the BSE SME platform in January 2025, reported a sharp jump in scale in FY26. Consolidated total income rose to ₹1,991.62 crore, with EBITDA of ₹32.53 crore and PAT of ₹18.96 crore. The year, however, came with clear profitability pressure. Management described FY26 as challenging for the capital markets industry, citing elevated volatility, tighter liquidity conditions, and a moderation in trading activity.

The presentation also makes it clear that the company’s current income mix is dominated by market-linked activities. In FY26, Business and Investment activities contributed ₹1,949.94 crore, or 97.91 percent of total income. Brokerage and commission income was ₹22.99 crore, and demat operations and other income was ₹18.68 crore.

What drove FY26 income and what held back profits

The income statement shows that while revenues were ₹1,975.96 crore and other income was ₹15.66 crore, the cost line called purchase of stock in trade was ₹1,910.91 crore. This structure aligns with the company’s disclosure that Business and Investment activities form the bulk of its income.

Management noted two specific drivers of pressure in FY26. First, the company invested in technology and operational infrastructure, including computers and software, which led to higher depreciation. Depreciation increased to ₹1.22 crore in FY26 from ₹0.69 crore in FY25. Second, profitability was impacted by loss from share trading activities.

Management also stated that an unrealised profit of ₹4.33 crore from SLBM transactions was not recognised in the FY26 financials and is expected to be realised in the upcoming quarter. This is a timing issue rather than a structural fix, but it matters for how investors interpret the reported FY26 profit number.

Financial summary

Business model: broking, market making, prop, and a larger digital push

Rikhav describes itself as a multi-asset, tech-enabled, client-centric platform. Its offerings span equity broking, derivatives, commodities, currency, clearing, depository services, mutual fund distribution, market making, IPO application support, and Margin Trading Facility.

On broking volumes, the presentation reports FY26 equity cash volume of ₹10,321.82 crore and derivatives volume of ₹1,14,864.93 crore. It also discloses average daily turnover of ₹41.62 crore in equity cash and ₹463.17 crore in derivatives.

Brokerage and commission income, while smaller than the investment activity line, grew in absolute terms to ₹22.99 crore in FY26 from ₹14.45 crore in FY25. The brokerage mix is skewed toward cash market. In FY26, cash market contributed 94.22 percent of brokerage and commission income, futures and options contributed 5.47 percent, and currency and commodity contributed 0.30 percent.

Brokerage and commission bifurcation

The company also positions its proprietary trading desk as a key revenue driver, stating it uses algorithmic models, delta hedging, and arbitrage strategies, backed by automated risk systems including ODIN and N Prime RMS.

On market making, Rikhav states it has been registered with BSE since 2012 and with NSE since 2016. It states it supports SME exchange listings by providing two-way quotes and highlights a track record of supporting SME listings with 46 clients.

A key operational lever in the deck is the digital ecosystem. The company highlights the Rikhav Plus mobile trading platform and an Aadhaar-based eKYC onboarding stack. It also reports a total client base of over 23,000 and active depository clients of over 18,400.

Balance sheet and cash flow snapshot

The consolidated balance sheet shows net worth rising to ₹245.47 crore in FY26. Cash and bank balances increased to ₹237.37 crore in FY26 from ₹159.67 crore in FY25. Inventories were ₹104.15 crore in FY26.

Cash flow moved back into positive territory in FY26, with cash from operations of ₹65.32 crore and net cash flow of ₹61.14 crore. FY25, however, showed negative cash from operations of -₹184.91 crore and net cash flow of -₹29.18 crore, which highlights volatility in cash generation.

In key ratios, ROE declined from 30.46 percent in FY24 to 7.72 percent in FY26, and EPS fell to ₹4.95 in FY26. Debt to equity was reported at 0.03x in FY26.

The stated roadmap: shifting mix toward brokerage, prop, and MTF

The roadmap section in the presentation outlines a clear set of priorities. The company indicates a planned reduction in market investments and greater focus on proprietary trading, brokerage, and MTF. It also outlines technology and infrastructure upgrades, including development of quantitative strategies and back-office improvements.

For distribution, the company outlines digital client acquisition through marketing, a planned online joint account facility, and a geographic expansion strategy beyond Maharashtra and Gujarat through digital channels and franchise partnerships. It also lists institutional brokerage development through empanelment with FDIs and banks.

Takeaways

Rikhav Securities’ FY26 results reflect a business that has scaled sharply in reported income, but with profitability under pressure and an income mix dominated by Business and Investment activities. Management has acknowledged that share trading losses and higher depreciation affected FY26 profitability, while also pointing to an SLBM unrealised profit of ₹4.33 crore expected to be realised in the following quarter.

The key question going forward, based strictly on what is presented, is whether the roadmap priorities of building brokerage, proprietary trading, and MTF, supported by digital onboarding and risk systems, lead to a more stable and better quality earnings profile than what the FY24 to FY26 trend in ROE and EPS currently shows.