The business model

Orbis sits in the plumbing of the capital markets. It doesn't manage money or take market risk — it safekeeps and services other people's assets under a SEBI custodian licence. Clients are FPIs, AIFs, PMS managers, mutual funds, foreign banks, NRIs/OCIs and brokers — 6,000+ of them across 30 countries, with ₹1,68,492 Cr of Assets Under Custody.

Services offered on one platform: custody and depository, Professional Clearing Member (clearing and settlement), Designated Depository Participant (FPI registration), fund accounting and administration, RTA, and trusteeship through subsidiary OTSPL. A GIFT City subsidiary (OFSPL) got its IFSCA Finance Company licence in Sep-2025.

But here's the part that matters most, and it isn't obvious from the brochure pages: only about 40% of revenue is fees. The other 60% is float income. Clients park margin and exposure deposits with Orbis — ₹3,947 Cr sitting on the balance sheet at 31-Mar-26 — which Orbis holds in bank deposits (₹3,846 Cr) and government securities. It earns interest on that pool (₹285.69 Cr) and pays a lower rate back to clients (₹73.15 Cr in finance costs). The spread is kept.

So Orbis is really two businesses stapled together: an asset-servicing fee business, and a rate-sensitive spread/treasury business. It also runs ₹1,670 Cr of bank guarantees to clearing corporations, backed by the personal guarantee of promoter Atul Gupta.

FY26 vs FY25

Consolidated is nearly identical: revenue ₹487.92 Cr vs ₹556.16 Cr, PAT ₹209.70 Cr vs ₹204.63 Cr.

Revenue fell ₹68.7 Cr but expenses fell ₹79.2 Cr, so profit still rose. Dividend went up to ₹2.00 from ₹1.80.

Why revenue fell

Driver 1: Interest on bank deposits fell ₹39.5 Cr (325.23 → 285.69, −12.2%). This is not a loss of business. The float actually grew — client margin deposits rose from ₹3,536.71 Cr to ₹3,947.45 Cr (+11.6%) and bank balances from ₹3,590.57 Cr to ₹3,845.94 Cr. Income fell on a larger pool, which means yields compressed. The rate cycle, in other words. You can see the same effect mirrored on the cost side: interest paid to clients on their margin deposits fell from ₹89.84 Cr to ₹73.15 Cr. Net float income went from ₹235.4 Cr to ₹212.5 Cr — down, but only ₹23 Cr, not ₹40 Cr.

Driver 2: Custody fees fell ₹41.9 Cr (198.80 → 156.90, −21%). This is the one that needs explaining, because AUC rose 18% over the same period. Taken at face value it implies roughly a third off the effective fee rate on custody assets.

The likely answer is sitting in the expense note: "Commission fee" collapsed from ₹57.62 Cr to ₹4.07 Cr. A ₹53.6 Cr drop in commission paid, alongside a ₹41.9 Cr drop in custody revenue, in the same year, strongly suggests a distribution or referral arrangement either ended or moved to a net basis — Orbis was booking gross custody revenue and paying a large commission out of it, and stopped. If so, most of the headline revenue decline is presentational rather than economic, which is exactly why PBT went up while revenue went down.

That's an inference, not a disclosure. The annual report never says it.

Partly offsetting: PCM (clearing) revenue grew 54% to ₹32.88 Cr and RTA grew 52% to ₹3.72 Cr — both small but growing fast. Fund administration went fully live in GIFT City servicing ~15 funds.

What management says about it

Very little. The Directors' Report states income fell and expenditure fell "significantly," then pivots to PBT growth of 3.76% and credits "operational efficiency, prudent cost management." The Chairman's and MD's letters don't address the decline at all — the MD instead quotes five-year CAGRs (AUC 25.76%, revenue 26.94%, profit 44.70%). There is no segment reporting; the company treats itself as one operating segment.

Three things worth flagging

• Diluted EPS is flat at ₹15.53 vs ₹15.52. Profit grew 2.6% but ESOP issuance absorbed all of it — 12.05 lakh shares in FY26 plus another 5.93 lakh after year-end. Return on average net worth also dropped from 25.8% to 21.0% as capital accumulates faster than earnings.

• The float is the business. 60% of revenue is interest income on client money. That's structurally rate-sensitive and largely outside management's control, and it's why revenue can fall while the underlying franchise grows.

• Bank guarantees of ₹1,670 Cr (up from ₹946 Cr) are backed by the promoter's irrevocable personal guarantee. Guarantee charges rose from ₹7.64 Cr to ₹12.74 Cr accordingly. That's a key-man dependency worth understanding.