The stock, trading at ₹32.90 as of February 11, 2026, has witnessed a modest single-day gain of 0.24% following the results announcement, but remains deeply entrenched in bearish territory. Over the past year, the stock has declined 19.36%, significantly underperforming both the Sensex (which gained 10.35%) and the broader NBFC sector (which advanced 26.61%). The company's technical indicators signal a bearish trend, with the stock trading below all major moving averages from 5-day to 200-day, whilst fundamental metrics paint an equally concerning picture of operational distress.
Financial Performance: Profitability Collapse Amid Revenue Growth
In Q3 FY26 (October-December 2025), Acme Resources reported net sales of ₹3.26 crores, representing a robust 55.24% quarter-on-quarter increase and an impressive 70.68% year-on-year expansion. However, this revenue growth masked a catastrophic deterioration in profitability metrics. The company's operating profit before depreciation, interest, and tax (excluding other income) plunged to a negative ₹3.95 crores, marking the lowest level in recent quarters and translating to an operating margin of negative 121.17%.
The profit before tax stood at negative ₹4.04 crores in Q3 FY26, down dramatically from a positive ₹1.60 crores in Q2 FY26. Even after accounting for a tax benefit of ₹1.01 crores (representing an effective tax rate of 25.00%), the company recorded a net loss of ₹3.03 crores. The PAT margin collapsed to negative 92.94%, compared to a positive 43.81% in the preceding quarter and 58.12% in the year-ago period. This sharp reversal in profitability, despite revenue growth, suggests severe operational inefficiencies or one-off exceptional charges that have decimated the bottom line.
| Quarter | Net Sales (₹ Cr) | Net Profit (₹ Cr) | Operating Margin (%) | PAT Margin (%) |
|---|---|---|---|---|
| Dec'25 | 3.26 | -3.03 | -121.17% | -92.94% |
| Sep'25 | 2.10 | 0.92 | 38.57% | 43.81% |
| Jun'25 | 1.98 | 1.19 | 82.32% | 60.10% |
| Mar'25 | 4.91 | -0.56 | -6.52% | -11.41% |
| Dec'24 | 1.91 | 1.11 | 81.68% | 58.12% |
| Sep'24 | 2.42 | 2.09 | 92.98% | 86.36% |
| Jun'24 | 1.67 | 0.89 | 77.84% | 53.29% |
On a nine-month basis for FY2026 (April-December 2025), the company generated net sales of ₹7.34 crores compared to ₹6.00 crores in the corresponding period of FY2025, reflecting a 22.33% year-on-year increase. However, the cumulative net profit for the first nine months of FY2026 stood at negative ₹0.92 crores, a stark contrast to the positive ₹4.09 crores reported in 9M FY2025. This deterioration underscores the severity of the recent quarter's losses and raises questions about the sustainability of the business model.
Critical Red Flag: Operating Losses
The company's operating profit excluding other income turned deeply negative at ₹3.95 crores in Q3 FY26, representing the lowest level on record. This indicates that core business operations are currently loss-making, a situation that cannot be sustained without significant corrective measures or capital infusion. The 121.17% negative operating margin suggests that for every rupee of revenue, the company is losing more than one rupee at the operational level.
Balance Sheet Quality: Stable but Concerns Emerging
As of March 31, 2025, Acme Resources maintained a shareholder equity base of ₹130.83 crores, comprising share capital of ₹25.74 crores and reserves of ₹105.08 crores. The company operates with minimal long-term debt (zero as per the latest annual data), resulting in a conservative debt-to-equity ratio of 0.09. This low leverage position provides some cushion against the current operational challenges, though the recent quarterly losses are beginning to erode the reserves accumulated over previous years.
The company's return on equity (ROE) stands at a meagre 2.00% for the latest period, significantly below industry standards and indicative of poor capital efficiency. The five-year average ROE of 3.37% confirms a consistent pattern of weak profitability. The return on capital employed (ROCE) of 2.56% further reinforces concerns about the company's ability to generate adequate returns from its deployed capital base. These profitability metrics place Acme Resources in the "Below Average" quality category, reflecting long-term underperformance relative to peers and broader market standards.
Sector Context: Underperforming Amidst NBFC Sector Strength
The broader NBFC sector has demonstrated resilience over the past year, delivering returns of 26.61% as credit demand remained robust and asset quality metrics stayed stable across most players. However, Acme Resources has dramatically underperformed this sectoral trend, posting a negative 19.36% return over the same period. This 45.97 percentage point underperformance versus the sector benchmark highlights company-specific challenges that extend beyond macroeconomic or industry-wide factors.
The company's micro-cap status (market capitalisation of ₹84.70 crores) places it in a particularly vulnerable position. Unlike larger NBFCs with diversified loan books, extensive distribution networks, and robust risk management frameworks, micro-cap financial companies often face heightened operational risks, limited access to low-cost funding, and greater susceptibility to asset quality deterioration. The recent quarterly loss suggests that these structural challenges may be manifesting in Acme Resources' financial performance.
Market Positioning Concern
Acme Resources ranks sixth among its peer group in terms of market capitalisation, reflecting its limited scale and market presence. With institutional holdings at zero percent and no mutual fund or foreign institutional investor participation, the stock lacks the support of sophisticated investors who typically conduct rigorous due diligence. The absence of institutional interest serves as a cautionary signal about the company's fundamental quality and growth prospects.
Peer Comparison: Valuation Premium Unjustified by Fundamentals
When benchmarked against comparable micro-cap NBFCs, Acme Resources presents a mixed valuation picture. The company trades at a price-to-earnings (TTM) ratio of 31.76x, which appears moderate compared to some peers but seems expensive given the recent loss-making quarter and weak return ratios. The price-to-book value of 0.64x suggests the stock trades at a discount to its book value, which typically indicates market scepticism about the quality of assets or future earnings potential.
| Company | P/E (TTM) | P/BV | ROE (%) | Debt/Equity | Div Yield (%) |
|---|---|---|---|---|---|
| Acme Resources | 31.76 | 0.64 | 3.37 | 0.09 | NA |
| Advik Capital | NA (Loss Making) | 0.53 | 18.26 | 0.84 | NA |
| Mukesh Babu Fin. | 16.64 | 0.27 | 2.78 | 0.14 | 0.98 |
| Inter Globe Fin | NA (Loss Making) | 0.70 | 2.08 | 0.03 | NA |
| TruCap Finance | NA (Loss Making) | 0.82 | 1.73 | 3.02 | NA |
| Paras Petrofils | 8255.26 | 3.97 | 0.00 | -0.05 | NA |
Acme Resources' ROE of 3.37% trails most peers except TruCap Finance and Paras Petrofils, whilst significantly lagging behind Advik Capital's 18.26%. The company maintains a conservative debt-to-equity ratio of 0.09, which is lower than most peers, suggesting limited financial leverage. However, this conservative capital structure has not translated into superior returns, raising questions about management's capital allocation decisions and operational execution capabilities.
Valuation Analysis: Expensive Rating Despite Recent Decline
Despite the stock's 19.36% decline over the past year and its current price of ₹32.90 (down 24.37% from its 52-week high of ₹43.50), Acme Resources carries an "Expensive" valuation grade. The company's enterprise value-to-EBITDA multiple of 25.84x and EV-to-sales ratio of 8.72x appear stretched, particularly given the negative EBITDA in the most recent quarter and the company's weak profitability track record.
The valuation grade has fluctuated between "Expensive" and "Very Expensive" over recent months, with the most recent change to "Expensive" occurring on October 15, 2025. Given the company's deteriorating financial performance, weak return ratios, and absence of institutional support, even the current "Expensive" designation appears generous. The stock's price-to-book ratio of 0.64x, whilst appearing attractive on the surface, likely reflects market concerns about asset quality and future earnings sustainability rather than representing genuine value.
Shareholding Pattern: Stable Promoter Base, Zero Institutional Interest
The shareholding structure of Acme Resources has remained remarkably stable over the past five quarters, with promoter holding consistently maintained at 73.43%. The promoter group comprises four entities: Narayani Dealers Private Limited (44.87%), Bluemoon Dealcom Private Limited (14.59%), Merit Dealers Private Limited (13.22%), and individual promoter Kuldeep Saluja (0.75%). Importantly, there is no promoter pledging, which eliminates concerns about potential forced selling or financial distress at the promoter level.
| Quarter | Promoter % | FII % | MF % | Insurance % | Other DII % | Public % |
|---|---|---|---|---|---|---|
| Dec'25 | 73.43 | 0.00 | 0.00 | 0.00 | 0.00 | 26.57 |
| Sep'25 | 73.43 | 0.00 | 0.00 | 0.00 | 0.00 | 26.57 |
| Jun'25 | 73.43 | 0.00 | 0.00 | 0.00 | 0.00 | 26.57 |
| Mar'25 | 73.43 | 0.00 | 0.00 | 0.00 | 0.00 | 26.57 |
| Dec'24 | 73.43 | 0.00 | 0.00 | 0.00 | 0.00 | 26.57 |
The complete absence of foreign institutional investor (FII), mutual fund, insurance company, and other domestic institutional investor (DII) participation is a significant red flag. Institutional investors typically bring rigorous analytical frameworks, corporate governance oversight, and long-term capital to their portfolio companies. The zero institutional holding suggests that sophisticated investors have either avoided the stock entirely or exited their positions, likely due to concerns about the company's scale, liquidity, governance, or growth prospects.
Stock Performance: Persistent Underperformance Across Timeframes
Acme Resources' stock performance has been deeply disappointing across most relevant timeframes. Over the past year, the stock has declined 19.36% whilst the Sensex gained 10.35%, resulting in a negative alpha of 29.71 percentage points. The underperformance becomes even more pronounced when compared to the NBFC sector's 26.61% gain over the same period, highlighting company-specific challenges rather than broader sectoral headwinds.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | +0.58% | +0.44% | +0.14% |
| 1 Month | -9.89% | +0.73% | -10.62% |
| 3 Months | -15.75% | +0.38% | -16.13% |
| 6 Months | -17.71% | +4.45% | -22.16% |
| Year-to-Date | -15.10% | -1.21% | -13.89% |
| 1 Year | -19.36% | +10.35% | -29.71% |
| 2 Years | -49.49% | +17.59% | -67.08% |
| 3 Years | +77.36% | +38.73% | +38.63% |
The two-year performance is particularly concerning, with the stock declining 49.49% compared to the Sensex's 17.59% gain, resulting in a massive negative alpha of 67.08 percentage points. Only on the three-year and five-year horizons does the stock show positive absolute returns of 77.36% and 204.07% respectively, though these longer-term gains appear increasingly distant given the recent deterioration in fundamentals.
The stock's risk profile classifies it as "High Beta" with an adjusted beta of 1.50, indicating it is 50% more volatile than the broader market. The volatility of 42.64% over the past year significantly exceeds the Sensex's 11.52%, placing Acme Resources in the "High Risk, Low Return" category—an unfavourable combination for investors. The negative risk-adjusted return of -0.45 confirms that the stock has delivered poor returns even after accounting for its elevated risk profile.
Investment Thesis: Multiple Red Flags Justify Strong Sell Rating
The investment case for Acme Resources has deteriorated significantly following the Q3 FY26 results. The company's proprietary Mojo Score of 17 out of 100 places it firmly in "Strong Sell" territory, reflecting a confluence of negative factors across valuation, quality, financial trends, and technical indicators. The score dropped from 21 in mid-February 2025, indicating a continued downward trajectory in the company's investment attractiveness.
The technical trend remains firmly bearish, with the stock trading below all key moving averages and showing consistent lower lows. The MACD, Bollinger Bands, and KST indicators all signal bearish momentum on weekly and monthly timeframes. The stock's distance of 24.37% below its 52-week high and proximity to its 52-week low (just 8.05% above) suggests limited downside cushion and potential for further weakness if operational challenges persist.
Key Strengths & Risk Factors
Key Strengths ✓
- Conservative Capital Structure: Zero long-term debt and debt-to-equity ratio of just 0.09 provides financial flexibility and reduces bankruptcy risk during operational challenges.
- Stable Promoter Holding: Consistent 73.43% promoter stake with no pledging demonstrates promoter commitment and eliminates concerns about forced selling pressure.
- Revenue Growth Momentum: Q3 FY26 revenue of ₹3.26 crores grew 70.68% year-on-year, indicating some underlying business traction despite profitability challenges.
- Regulatory Compliance: Registered with RBI under Section 45-IA to operate as an NBFC, providing legitimacy and regulatory oversight to operations.
- Long Operating History: Incorporated in 1985, the company has survived multiple business cycles, though recent performance raises concerns about current management effectiveness.
Key Concerns ⚠️
- Catastrophic Profit Collapse: Q3 FY26 net loss of ₹3.03 crores represents a 429.35% QoQ decline, with operating margins turning deeply negative at -121.17%—an unsustainable situation.
- Weak Return Ratios: ROE of 2.00% and ROCE of 2.56% indicate extremely poor capital efficiency and value destruction for shareholders over the long term.
- Zero Institutional Support: Complete absence of FII, mutual fund, and insurance holdings signals sophisticated investors' lack of confidence in the company's prospects.
- Persistent Underperformance: Stock declined 19.36% over one year and 49.49% over two years, massively underperforming both the Sensex and NBFC sector benchmarks.
- High Volatility Profile: Beta of 1.50 and volatility of 42.64% classify the stock as high-risk, whilst recent returns have been deeply negative—worst possible combination.
- Below Average Quality: Long-term financial performance earns a "Below Average" quality grade, with negative five-year sales growth of -5.35% and EBIT growth of -12.38%.
- Limited Scale: Micro-cap status with market capitalisation of just ₹84.70 crores limits operational leverage, funding access, and institutional investor interest.
Outlook: Critical Monitoring Points for Investors
Positive Catalysts
- Management Commentary: Detailed explanation of Q3 losses and credible turnaround plan with specific milestones could restore some investor confidence.
- Return to Profitability: Q4 FY26 results showing positive operating margins and net profit would signal that Q3 losses were an aberration rather than a structural issue.
- Asset Quality Disclosure: Transparent reporting on loan book composition, NPA levels, and provisioning adequacy would address concerns about hidden stress.
- Institutional Interest: Entry of mutual funds or other institutional investors would validate the investment case and improve liquidity.
Red Flags to Watch
- Continued Losses: Another quarter of negative profitability in Q4 FY26 would confirm structural problems rather than temporary issues.
- Asset Quality Deterioration: Rising NPAs or provisioning requirements would compound profitability challenges and raise solvency concerns.
- Promoter Actions: Any reduction in promoter stake or initiation of share pledging would signal loss of confidence at the highest level.
- Technical Breakdown: Breach of ₹30.45 support (52-week low) would trigger further selling pressure and potential capitulation.
- Regulatory Action: Any adverse RBI observations or compliance issues would severely damage credibility and operational capabilities.
The Verdict: Strong Sell with Exit Recommended
Score: 17/100
For Fresh Investors: Avoid completely. The company's catastrophic Q3 FY26 loss, deeply negative operating margins, weak return ratios, and absence of institutional support present unacceptable risk. Multiple superior alternatives exist within the NBFC space with stronger fundamentals, better management track records, and positive momentum.
For Existing Holders: Exit positions on any price strength. The combination of deteriorating financials, bearish technical trend, expensive valuation, and high volatility creates a toxic mix. Whilst the low debt provides some time for turnaround efforts, the severity of recent losses and persistent underperformance suggest deeper structural issues that may take years to resolve, if at all.
Fair Value Estimate: ₹25.00 (24.01% downside from current price of ₹32.90). This estimate assumes partial recovery in profitability but assigns a significant discount due to quality concerns, execution risks, and lack of institutional validation. Further downside possible if Q4 results disappoint.
Note- ROCE = (EBIT - Other income)/(Capital Employed - Cash - Current Investments)
⚠️ Investment Disclaimer
This article is for educational and informational purposes only and should not be construed as financial advice. Investors should conduct their own due diligence, consider their risk tolerance and investment objectives, and consult with a qualified financial advisor before making any investment decisions. Past performance is not indicative of future results. The views expressed are based on publicly available information and analysis as of the date of publication and may change without notice.
