Gretex Corporate Services Limited Q3 FY26 Earnings Call Summary

Summary

Gretex Corporate Services Limited - Q3 FY26 Earnings Call Summary Monday, January 19, 2026, 11:00 AM

Event Participants

Executives 3 Alok Harlalka (MD & CFO), Arvind Harlalka (Whole-Time Director), Sumeet Harlalka (Whole-Time Director)

Analysts 5 Nimesh Pandya (Individual Investor), Parth Patel (Patel Investments), Rohan Mehta (Individual Investor), Shania Jain (Individual Investor), Vikrant Verma (RK Advisory)

Financials & KPIs

Geographic & Segment Commentary

• Merchant Banking: Successfully listed Flywing Simulator, MPK Steel, and Munish Forge during Q3. The segment has a robust pipeline with 20 active mandates and several in-principle approvals recently received.
• Broking & Market Making: Gretex Share Broking Limited (subsidiary) provides liquidity to 63 SME companies. The company is currently preparing the subsidiary for its own independent listing to support the next growth phase.

Company-Specific & Strategic Commentary

• Alternative Investment Fund (AIF): Proposed investment in Bahutex Ventures LLP, a Category II AIF with a ₹100 crore target corpus. Gretex will hold a 50% partnership interest and commit 2.5% (₹2.5 crores) of the total capital.
• Strategic Pivot to Main Board: Management is intentionally shifting focus from SME IPOs to Main Board mandates to reduce 5% mandatory market-making inventory risk. Separate dedicated teams have been established for SME and Main Board due diligence.
• Regulatory Compliance: Management confirmed the payment of a ₹15 lakh SEBI penalty in January 2026, stating this concludes the inspection with no operational bans or “shadow bans” imposed on future activities.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Regulatory & Compliance

• Question: Is the ₹15 lakh SEBI penalty the final conclusion and does it impact operations? (Parth Patel)
• Answer: It is the final conclusion of the last inspection. There is no ban on daily operations or future AIF licenses; it was purely a financial liability. (Alok Harlalka)

Profitability & Margins

• Question: When will the company reach the 40-50% PAT margin level previously mentioned? (Parth Patel)
• Answer: We expect to reach roughly 45% consolidated PAT margins in Q4 FY26, as several company listings are scheduled for this quarter. (Alok Harlalka)

Alternative Investment Fund (AIF)

• Question: What is the capital commitment for the AIF and will it impact dividends? (Vikrant Verma)
• Answer: The commitment is 2.5% of the fund (₹2.5 crores). This is not material enough to stop dividend distributions. (Alok Harlalka)
• Question: How will you manage conflicts of interest between fund valuations and IPO pricing? (Vikrant Verma)
• Answer: The investment team is professional and separate. The fund will also invest in transactions where Gretex is not the involved merchant banker. (Alok Harlalka)

Strategic Shift & Execution

• Question: Does the Main Board require different skill sets or increased costs? (Rohan Mehta)
• Answer: We already have two distinct sets of employees for SME and Main Board due diligence. No additional cost increase is required to scale the Main Board segment. (Alok Harlalka)
• Question: Will you reduce merchant banking fees due to SME fatigue and lower subscriptions? (Tejpal Singh)
• Answer: No. If the market is poor, our effort to find investors actually increases. We will not compromise on fees below our minimum cost thresholds. (Alok Harlalka)

Key Takeaway

Gretex Corporate Services delivered a resilient Q3 FY26 with a total income of ₹54.8 crores and an EBITDA margin of 22.4%, despite the inherent volatility of capital market cycles. The company is undergoing a significant strategic pivot, shifting focus from SME IPOs to Main Board mandates to mitigate the inventory risks associated with mandatory 5% market-making stakes. With 20 active IPO mandates and a proposed ₹100 crore AIF (Bahutex Ventures), the group is expanding its integrated capital markets platform. Management expressed high confidence in Q4 FY26, guiding for a 40-45% PAT margin based on a heavy pipeline of scheduled listings and recent approvals. While SME market sentiment shows signs of normalization, Gretex intends to leverage its dual-team structure to capture higher-value Main Board opportunities while maintaining a disciplined cost base.