Dam Capital Advisors Limited

Stockbroking & Allied

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AI Summary

asof: 2026-09-18

Headwinds and Challenges

  • Challenging external environment in Q1 FY27: Management described the quarter as shaped by ongoing wars in West Asia and Russia-Ukraine, a sharp spike in crude oil prices, record weak levels for the rupee, and FPI outflows, all of which created a cautious investor mood through most of the quarter.
  • Deferred fund raising across the industry: In response to subdued market conditions and valuation considerations, several fund raising transactions were deferred as issuers adopted a wait-and-watch approach.
  • Decline in total income: Total income stood at INR 30.0 crore in Q1 FY27, down 2.9% year-on-year from INR 30.9 crore in Q1 FY26.
  • Weakness in broking/institutional equities: Revenue from broking stood at INR 16.3 crore in Q1 FY27, down 9.8% year-on-year from INR 18.0 crore in Q1 FY26.
  • Sharp profit compression: Profit After Tax fell to INR 0.15 crore in Q1 FY27 from INR 0.23 crore in Q1 FY26, with PAT margin declining to 0.5% from 0.8%.
  • Full-year FY26 versus FY25 decline: Total income fell to INR 237.1 crore in FY26 from INR 250.2 crore in FY25; PAT fell to INR 72.7 crore from INR 103.8 crore; PAT margin fell to 30.7% from 41.5%.
  • Board and KMP transitions: Mr. Jateen Madhukar Doshi completed his tenure as Whole Time Director on June 9, 2026 and ceased to be a Director and Key Managerial Personnel. Mr. Natarajan Srinivasan completes his tenure as Independent Director on August 18, 2026 and will cease to be a Director from close of business hours on that date.

Tailwinds and Growth Prospects

  • Gradual return of IPO market activity: Management observed a gradual return in IPO market activity towards the end of Q1 FY27, alongside renewed investor interest in some of the company’s deals.
  • Merchant banking revenue growth: Revenue from merchant banking stood at INR 9.5 crore in Q1 FY27, up 3.7% year-on-year from INR 9.1 crore in Q1 FY26.
  • Strong mandate pipeline: 26 IPOs were in the pipeline, with 4 new IPO mandates added in Q1 FY27. DAM Capital is the Left Lead Banker on 10 IPOs, including 3 Sole Banker IPOs, and is also mandated for multiple capital market and advisory transactions.
  • Deal execution in Q1 FY27: Transactions comprised the INR 1,221 crore OFS of NLC India and the INR 252 crore buyback of Welspun Living, with DAM Capital acting as Advisor.
  • Track record: 98 ECM transactions executed from November 2019 to June 2026, raising over INR 1,62,700 crore, comprising 41 IPOs (including 1 REIT), 22 QIPs, 10 Buybacks, 8 Preferential Issues, 8 OFS, 5 Rights Issues and 4 Open Offers.
  • Institutional equities franchise: Total active institutional clients stood at 304 as of June 30, 2026; research covered 202 stocks across 23 sectors as of June 30, 2026.
  • Strengthened cash position: Net cash available as of June 30, 2026 stood at INR 312 crore, compared with INR 234 crore as of June 30, 2025.
  • Leadership continuity and renewal: Mr. Dhvanil Sanjiv Dharia was appointed Additional Director and Whole Time Director for five years from August 11, 2026 to August 10, 2031; he has been associated with DAM Capital since its inception in 2019 and was part of the core team that set up the Investment Banking Division. Mr. Dharmesh Anil Mehta was re-appointed as Managing Director and CEO for five years at the AGM.

Key Risks

  • Cyclicality of capital markets: Management stated that capital markets are inherently cyclical and that the business is best assessed across cycles rather than quarter on quarter.
  • Macro and geopolitical sensitivity: The quarter’s performance was tied to wars in West Asia and Russia-Ukraine, crude oil price spikes, rupee weakness, and FPI outflows, all of which weighed on investor sentiment and transaction activity.
  • Dependence on IPO and ECM activity: Deferral of fund raising transactions by issuers directly affects merchant banking revenue, as seen in the subdued Q1 FY27 environment.
  • Broking revenue sensitivity: Institutional equities revenue declined year-on-year in Q1 FY27 and in FY26 versus FY25, indicating exposure to market activity levels.
  • Governance and personnel changes: The cessation of Mr. Jateen Madhukar Doshi as Whole Time Director and KMP on June 9, 2026, and the completion of Mr. Natarajan Srinivasan’s tenure as Independent Director on August 18, 2026, represent changes to the board and management structure.

Management Guidance Versus Observed Business Performance

  • Guidance: Management expects the recovery in IPO market activity seen towards the end of Q1 FY27 to continue through Q2 and Q3 as some macro uncertainties begin to ease and market sentiment normalises. Management also stated that with a healthy pipeline and improving market activity, the company is well positioned to capture opportunities as sentiment strengthens.
  • Observed performance: Q1 FY27 total income declined 2.9% year-on-year to INR 30.0 crore, broking revenue declined 9.8% year-on-year to INR 16.3 crore, PAT fell to INR 0.15 crore from INR 0.23 crore, and PAT margin declined to 0.5% from 0.8%. Merchant banking revenue grew 3.7% year-on-year to INR 9.5 crore. The 26-IPO pipeline, 4 new IPO mandates in Q1 FY27, and 10 Left Lead positions provide evidence of mandate traction even as reported revenue and profit declined.
  • AGM outcomes: At the 33rd AGM held on September 8, 2026, all ten resolutions were passed with the requisite majority, including adoption of financial statements for the year ended March 31, 2026, declaration of a final dividend of Re. 1/- per equity share, re-appointment of Mr. Dharmesh Anil Mehta as Managing Director and CEO for five years, appointment of Mr. Dhvanil Sanjiv Dharia as Whole Time Director, and approvals related to the DAM Capital Employee Stock Option Scheme 2024 (ESOP 2024).
   

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