5paisa capital received a Show Cause Notice from the Securities and Exchange Board of India (SEBI) regarding the expiry of its Investment Adviser registration certificate, potentially impacting its ability to operate in that capacity. The notice, received on June 05, 2026, alleges that the company failed to pay the prescribed fees necessary to maintain the registration, which consequently expired. SEBI has sought a response as to why the certificate of registration should not be cancelled or suspended under Regulation 30A of the SEBI (Intermediaries) Regulations, 2008, read with Section 12(3) of the SEBI Act, 1992.

The regulatory action stems from an alleged violation of Clause 3 of the Second Schedule of the SEBI (Investment Advisers) Regulations, 2013. This clause mandates that an Investment Adviser must pay the prescribed fees every five years from the date of grant of the certificate, within three months before the expiry of the period for which the fees have been paid. SEBI stated that the company ceased to satisfy the conditions of registration stipulated under Regulation 13(a) read with Clause 3 of the Second Schedule due to this non-payment.

Details of the Show Cause Notice

The disclosure was made to the stock exchanges under Regulation 30 of the SEBI (Listing Obligations and Disclosures Requirements) Regulations, 2015. The filing provided specific details regarding the nature of the action and the alleged contraventions.

The company stated that the financial or operational impact of the notice cannot be quantified at this stage, as it depends entirely on the outcome of the proceedings. 5paisa Capital Limited confirmed that it will promptly respond to the show cause notice and inform the stock exchanges of any material developments. The company emphasized its commitment to adhering to corporate governance standards and complying with SEBI Listing Regulations.

5paisa Capital Limited convened its Q4FY26 earnings conference call on May 04, 2026, with Managing Director and CEO Mr. Gaurav Seth, Whole-time Director and CFO Mr. Gourav Munjal, and Whole-time Director and CTO Mr. Ameya Agnihotri addressing investors and analysts. The session, the transcript of which was formally submitted to stock exchanges under Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 on May 08, 2026, covered the company's financial performance for the quarter and year ended March 31, 2026, alongside strategic updates on technology, product development, and capital allocation.

Market Backdrop and Operating Environment

Mr. Gaurav Seth opened the call by noting that capital markets remained highly volatile during Q4FY26, influenced by geopolitical developments including the Iran war, macroeconomic uncertainty, and the global impact of artificial intelligence on valuations. Brent crude prices crossed USD 100 per barrel, contributing to inflationary pressures and a weakening of the rupee against the dollar. Foreign buyers continued to sell, leading to approximately an 11% decline in indices. Despite this, domestic institutional and retail investors continued buying, reflecting the strength of India's domestic investor base. Demat account additions moderated to about 8.5 million in the quarter, down approximately 3% compared to the previous quarter. Notwithstanding the slowdown in new account additions, trading activity remained broadly resilient, with exchange retail F&O premium average daily turnover (ADTO) growing 22% QoQ to ₹78,000 crore, and exchange retail cash ADTO growing 10% QoQ to ₹43,974 crore.

Q4FY26 Financial Performance

The company reported steady financial progress across key metrics during the quarter. The following table summarizes the key financial and operational figures:

Mr. Seth noted that employee costs increased due to hiring in product, technology, marketing, and AI teams, while other expenses rose on account of higher customer acquisition activity compared to the previous quarter. The mutual fund AUM decline of 6% QoQ was partially attributed to mark-to-market impact from the broader market downturn.

Rights Issue and Balance Sheet Strengthening

A significant development during the period was the successful completion of the company's rights issue, which was oversubscribed. The issue raised ₹468 crore, with strong participation from promoters and new investors. Following the rights issue, the company's networth increased to more than ₹1,100 crore, representing a meaningful strengthening of its balance sheet.

Management outlined three primary areas for capital deployment:

• Supporting higher trading volumes: Maintaining adequate margins with exchanges to support anticipated growth in trading activity
• Growing the MTF book: Expanding the Margin Trade Funding book, where the company is witnessing strong growth
• Core business expansion: Investments in marketing, brand development, product, technology, and AI

Mr. Munjal confirmed that deployment had already commenced, with the company's margin capacity increased to 1.5x from its existing level, in line with the prospectus.

Product, Technology, and AI Investments

The company made several notable advances on the product and technology front during Q4FY26. Key highlights include:

• Trading tools launched: Scalper, multi-chart setup, strategy builder, option chain, and alpha scan
• API and partner ecosystem upgrades: Greek data, 20 depth APIs, and static IP support added to Xstream and XTS platforms
• MTF and PayLater expansion: Eligible stock universe expanded from 700 to 1,500-plus stocks; investor limit increased to ₹3 crore
• Mutual fund enhancements: ETF dashboard launched, SEBI-compliant infrastructure introduced, and stock SIPs reintroduced
• AI trading companion: 5paisa MCP, an AI trading companion linked to broking accounts, was further improved to allow users to analyze and execute trades via a chat window connected to an MCP server
• Infrastructure improvements: Reduced order placement latency, improved execution speed, caching of static data, optimized market feed APIs with smaller payloads, and faster charting

Community features such as trade patterns and trader stories are currently in development to support long-term user engagement.

Market Share and Customer Acquisition Strategy

In response to analyst questions, Mr. Seth stated that 5paisa holds approximately 2% market share in both F&O and cash segments. On customer acquisition strategy, management indicated a dual focus: attracting active and professional traders seeking advanced trading tools and improved profitability, as well as investors looking to build long-term wealth through products such as MTF, ETFs, and mutual funds. The company acquired more than one lakh customers in Q4FY26, representing a 33% increase over the previous quarter, driven by organic acquisitions, stronger brand campaigns, and targeted engagement. Management also noted improvements in first-year revenue metrics and the cost-to-revenue (CTR) ratio from a payback perspective.