Gretex Corporate Services’ record is built on a merchant-banking franchise that is growing revenue and winning main-board IPO mandates, but the cash conversion behind that growth is deeply negative. Over ten years through FY2026, cumulative operating cash flow was negative ₹64 crore against cumulative profit after tax (less other income) of ₹68 crore. Three regulatory penalties from SEBI, a 21-day ban on new mandates, and a dense web of promoter-linked entity transactions sit alongside a board and auditor history that concentrates control in the promoter family.
Key findings
- Operating cash flow has been persistently negative despite reported profits
Major- Over the ten years through FY2026, cumulative cash flow from operations was negative ₹64 crore against a cumulative profit after tax (less other income) of ₹68 crore, a ratio of -0.95x. In FY2026 alone, the company reported standalone profit after tax of ₹13.00 crore but generated negative operating cash flow of ₹28.30 crore. Free cash flow was negative for three consecutive years while profit after tax remained positive: FY2024 ₹-39.70 crore, FY2025 ₹-34.61 crore, and FY2026 ₹-29.20 crore. - SEBI has imposed escalating penalties and a 21-day ban on new mandates
Major- SEBI imposed a penalty of ₹20,00,000 on 27 June 2025 for LODR and ICDR violations, followed by an order dated 30 October 2025 prohibiting the company from taking up any new merchant banking assignment for 21 days for non-maintenance of minimum net worth and inadequate due diligence. A further penalty of ₹15,00,000 was levied on 13 January 2026 for non-compliances with ICDR and Merchant Bankers Regulations. Exchange fines for disclosure lapses and a pending SEBI show-cause notice dated 11 July 2025 add to the regulatory overhang. - The group repeatedly creates, restructures, and sells subsidiaries among promoter-linked entities
Major- In FY2023, a ₹4.01 crore loan to Sunview Nirman Private Limited was converted into equity, making it a 56.14% subsidiary, and within the same year its sale to associate Gretex Share Broking Private Limited was proposed for ₹4.61 crore. In FY2026, consolidated profit after tax was ₹27.63 crore versus standalone profit after tax of ₹13.00 crore, meaning 53% of group profit resided at subsidiaries, while standalone operating cash flow was negative ₹28.30 crore. - The predecessor auditor resigned mid-term and a single small firm served as sole auditor during a period of material group expansion
Minor- M/s. ADESH & CO. resigned on 27 March 2021 citing pre-occupation, and M/s. Gupta Agarwal & Associates (later renamed Jay Gupta & Associates) was appointed to fill the vacancy and subsequently given a five-year term. A second joint auditor, M/s. V. Singhi and Associates, was added only from 1 April 2025, after the group’s operations and complexity had already expanded materially. - Revenue recognition is lumpy and receivables quality is flagged by a sharp DSRI spike
Minor- Management stated in Q3 FY2026 that revenue recognition will be “uneven or lumpy” in upcoming quarters due to six ongoing main-board IPO mandates with longer execution cycles. The Days Sales in Receivables Index rose 539% year-on-year.
What to watch
- SEBI settlement and enquiry proceedings. The settlement application filed under SEBI (Settlement Proceedings) Regulations, 2018 and the enquiry under the Merchant Bankers Regulations remain pending as of the FY2025-26 Annual Report.
- SEBI show-cause notice. The show-cause notice dated 11 July 2025 under Regulation 27(1) of SEBI (Intermediaries) Regulations, 2008 remains pending as of the FY2025-26 Annual Report.
- Warrant conversion and promoter reclassification. Conversion of 19,51,000 warrants issued on a preferential basis and reclassification of Ambition Tie-Up Private Limited to promoter group, per the postal ballot notice dated 7 May 2026.
- GST appeal. Outcome of the GST appeal before appellate authorities, anchored to the FY2025-26 reporting period.
- Auditor re-appointment vote. Shareholder vote on re-appointment of M/s. Jay Gupta & Associates as Joint Statutory Auditor at the 18th AGM, as proposed in the FY2025-26 Annual Report.
Bottom line: This is a growing merchant-banking franchise whose reported profits have not translated into operating cash for a decade, while capital flows preferentially to promoter-linked entities through loans, equity subscriptions, and warrant issues. The regulatory record is no longer a matter of isolated fines: a 21-day ban on new mandates and a pending SEBI enquiry sit on the file. Watch the settlement proceedings, the warrant conversion, and the GST appeal for signals on whether the cash-flow gap and governance concentration begin to close or widen further.