The quarter's performance was particularly noteworthy given the challenging macroeconomic environment and intense competition in the consumer durables space. Aditya Vision, with a market capitalisation of ₹6,143 crores and operations spanning every district of Bihar, has established itself as a household name in the state. However, the company's shares have faced headwinds in recent months, trading at ₹477.80 as of January 27, 2026, down 20.11% from the 52-week high of ₹598.10 touched in mid-2025.
Financial Performance: Strong Topline Growth Masks Margin Pressures
The December 2025 quarter showcased Aditya Vision's ability to capitalise on festive demand, with net sales climbing to ₹648.86 crores, a substantial improvement from ₹508.45 crores in Q3 FY25. This 27.62% year-on-year expansion was driven by robust consumer demand during the Diwali and year-end shopping season. On a sequential basis, the growth was even more pronounced at 41.83%, reflecting the typical seasonal uptick in consumer electronics purchasing patterns.
| Metric | Q3 FY26 | Q2 FY26 | Q3 FY25 | QoQ Change | YoY Change |
|---|---|---|---|---|---|
| Net Sales (₹ Cr) | 648.86 | 457.50 | 508.45 | +41.83% | +27.62% |
| Operating Profit (₹ Cr) | 52.97 | 34.68 | 46.56 | +52.76% | +13.77% |
| Operating Margin (%) | 8.16% | 7.58% | 9.16% | +58 bps | -100 bps |
| Net Profit (₹ Cr) | 27.31 | 12.72 | 24.22 | +114.70% | +12.77% |
| PAT Margin (%) | 4.21% | 2.78% | 4.76% | +143 bps | -55 bps |
However, the picture on profitability margins presents a more nuanced narrative. Operating profit (excluding other income) stood at ₹52.97 crores in Q3 FY26, translating to an operating margin of 8.16%. While this represents a sequential improvement of 58 basis points from Q2 FY26's 7.58%, it marks a year-on-year contraction of 100 basis points from the 9.16% achieved in Q3 FY25. This margin compression reflects heightened competitive intensity in the retail electronics space and potentially higher promotional expenses during the festive period.
The net profit margin similarly declined to 4.21% from 4.76% in the year-ago quarter, though it improved sequentially from 2.78% in Q2 FY26. The absolute net profit of ₹27.31 crores represents a healthy 12.77% year-on-year growth, but the sequential surge of 114.70% from ₹12.72 crores in Q2 FY26 underscores the pronounced seasonality in the business. Employee costs rose to ₹22.31 crores from ₹15.86 crores in Q3 FY25, reflecting the company's network expansion and potential wage inflation pressures.
Quarterly Trend Analysis: Seasonality Dominates Performance
| Quarter | Revenue (₹ Cr) | Net Profit (₹ Cr) | Operating Margin | PAT Margin |
|---|---|---|---|---|
| Dec'25 (Q3) | 648.86 | 27.31 | 8.16% | 4.21% |
| Sep'25 (Q2) | 457.50 | 12.72 | 7.58% | 2.78% |
| Jun'25 (Q1) | 940.23 | 55.16 | 9.54% | 5.87% |
| Mar'25 (Q4) | 486.69 | 15.98 | 8.69% | 3.28% |
| Dec'24 (Q3) | 508.45 | 24.22 | 9.16% | 4.76% |
| Sep'24 (Q2) | 375.85 | 12.21 | 8.00% | 3.25% |
| Jun'24 (Q1) | 888.78 | 53.08 | 9.58% | 5.97% |
The quarterly trend table reveals a pronounced seasonal pattern in Aditya Vision's business, with Q1 (April-June) consistently delivering the strongest performance, followed by Q3 (October-December). This aligns with India's traditional buying seasons, including weddings, festivals, and the year-end shopping spree. The company's ability to scale up operations during peak periods whilst maintaining reasonable profitability demonstrates operational competence, though the margin variability across quarters warrants close monitoring.
Operational Excellence: Strong Returns Offset by Elevated Leverage
Aditya Vision's operational metrics paint a picture of a fundamentally sound business with impressive capital efficiency. The company's average return on equity (ROE) of 37.54% over the past few years places it significantly above most peers in the retail sector, reflecting strong profitability relative to shareholder equity. Similarly, the average return on capital employed (ROCE) of 27.89% demonstrates efficient utilisation of capital resources, though the latest ROCE of 18.48% suggests some moderation in recent periods.
Key Operational Strengths
Return on Equity: The company's ROE of 37.54% (average) significantly outpaces industry standards, indicating superior capital efficiency and profitability generation. This high ROE justifies the premium valuation to some extent, though current levels appear stretched.
Sales Growth Momentum: Five-year sales compound annual growth rate (CAGR) of 30.43% and EBIT growth of 56.26% demonstrate robust expansion trajectory and improving operating leverage.
The balance sheet, however, presents a more mixed picture. Whilst the company eliminated long-term debt by FY25 (down from ₹18.82 crores in FY23), current liabilities surged to ₹458.69 crores from ₹209.67 crores in FY24, driven primarily by a sharp increase in trade payables to ₹148.67 crores from ₹61.95 crores. This suggests aggressive working capital management, potentially leveraging supplier credit to fund rapid expansion. The average debt-to-EBITDA ratio of 2.14 times and net debt-to-equity of 0.49 remain within manageable bounds, though the cash flow from operations turned negative at ₹40 crores in FY25 due to substantial working capital absorption.
Fixed assets increased to ₹106.02 crores in FY25 from ₹78.43 crores in FY24, reflecting ongoing store expansion and infrastructure investments. Current assets climbed to ₹913.17 crores from ₹586.21 crores, primarily driven by inventory build-up to support the growing retail footprint. The company's book value per share stands at ₹45.36, translating to a price-to-book ratio of 9.60 times—a premium that demands sustained high-growth performance to justify.
The Valuation Conundrum: Premium Pricing Meets Growth Expectations
Aditya Vision's current valuation multiples present the most significant challenge for prospective investors. Trading at a price-to-earnings ratio of 57 times trailing twelve-month earnings, the stock commands a substantial premium not only to the broader market but also to several retail peers. The price-to-book value of 9.60 times, whilst partially justified by the strong ROE, appears elevated when considering the competitive nature of the electronics retail business and inherent execution risks in rapid expansion.
| Valuation Metric | Current Value | Assessment |
|---|---|---|
| P/E Ratio (TTM) | 57.00x | Premium to sector |
| Price to Book Value | 9.60x | Elevated |
| EV/EBITDA | 30.21x | Expensive |
| EV/Sales | 2.69x | Above average |
| PEG Ratio | 4.37x | High relative to growth |
| Dividend Yield | 0.23% | Minimal income |
The PEG ratio of 4.37 times is particularly concerning, suggesting the stock is expensive relative to its earnings growth prospects. Conventional wisdom suggests a PEG ratio above 2.0 indicates overvaluation, and at 4.37, Aditya Vision would need to deliver exceptional growth to justify current pricing. The enterprise value-to-EBITDA multiple of 30.21 times further reinforces the expensive valuation assessment, especially when compared to historical norms and peer group averages.
Valuation Warning Signals
Multiple Expansion Limits: With the stock already trading at premium valuations across all metrics, further multiple expansion appears unlikely. Future returns will depend almost entirely on earnings growth delivery, leaving limited margin for disappointment.
Valuation Grade: The stock carries an "EXPENSIVE" valuation grade, having oscillated between "Expensive" and "Very Expensive" throughout 2024-25, indicating sustained premium pricing.
Peer Comparison: Premium Justified by Superior Returns
| Company | P/E (TTM) | P/BV | ROE (%) | Dividend Yield |
|---|---|---|---|---|
| Aditya Vision | 56.75x | 9.60x | 37.54% | 0.23% |
| A B Lifestyle | 88.34x | 9.57x | 11.08% | N/A |
| Medplus Health | 47.89x | 5.06x | 5.80% | N/A |
| Entero Healthcare | 45.62x | 2.86x | 6.26% | N/A |
| Shankara Buildpro | 21.10x | 3.54x | 0.00% | N/A |
When benchmarked against retail sector peers, Aditya Vision's valuation premium becomes more understandable. The company's ROE of 37.54% substantially exceeds peers like Medplus Health (5.80%), Entero Healthcare (6.26%), and A B Lifestyle (11.08%). This superior return profile provides some justification for the elevated price-to-book multiple of 9.60 times, which is comparable to A B Lifestyle's 9.57 times but significantly higher than Medplus Health's 5.06 times and Entero Healthcare's 2.86 times.
However, the P/E ratio of 56.75 times, whilst lower than A B Lifestyle's 88.34 times, exceeds Medplus Health (47.89 times) and Entero Healthcare (45.62 times). The key question for investors is whether Aditya Vision's growth trajectory and market positioning can sustain these premium multiples over the medium term, particularly given the intensifying competition in India's electronics retail landscape.
Shareholding Dynamics: Institutional Confidence Building Gradually
| Category | Dec'25 | Sep'25 | Jun'25 | QoQ Change |
|---|---|---|---|---|
| Promoter | 47.14% | 47.32% | 53.23% | -0.18% |
| FII | 17.74% | 18.76% | 17.67% | -1.02% |
| Mutual Funds | 16.81% | 15.74% | 9.53% | +1.07% |
| Insurance | 0.00% | 0.00% | 0.00% | 0.00% |
| Other DII | 0.64% | 0.72% | 0.31% | -0.08% |
| Non-Institutional | 17.67% | 17.46% | 19.26% | +0.21% |
The shareholding pattern reveals interesting dynamics. Promoter holding declined to 47.14% in December 2025 from 53.23% in June 2025, representing a significant 6.09 percentage point reduction over two quarters. The most substantial change occurred between June and September 2025, when promoters reduced their stake by 5.91%. This dilution likely reflects fundraising activities or stake sales, though no pledging of promoter shares provides comfort on financial stability.
Institutional participation has strengthened notably, with mutual fund holdings surging to 16.81% from just 9.53% in June 2025, an increase of 7.28 percentage points. This substantial uptick, including a 6.21 percentage point jump in the September quarter alone, signals growing institutional confidence in the company's prospects. Foreign institutional investors maintain a meaningful 17.74% stake, though this declined marginally by 1.02 percentage points in the December quarter. The total institutional holding of 35.19% provides a stable shareholder base and validates the growth story to some extent.
Stock Performance: Volatility Reflects Growth Stock Characteristics
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | +0.35% | -0.39% | +0.74% |
| 1 Month | -5.87% | -3.74% | -2.13% |
| 3 Months | -15.58% | -3.45% | -12.13% |
| 6 Months | +23.13% | +0.48% | +22.65% |
| Year-to-Date | -2.14% | -3.95% | +1.81% |
| 1 Year | +3.87% | +8.61% | -4.74% |
| 2 Years | +26.02% | +15.78% | +10.24% |
| 3 Years | +238.24% | +37.97% | +200.27% |
Aditya Vision's stock performance exhibits the volatility characteristic of high-growth small-cap stocks. Over the past three years, the stock has delivered exceptional returns of 238.24%, massively outperforming the Sensex's 37.97% gain by a staggering 200.27 percentage points. This stellar performance reflects the company's rapid expansion phase and market recognition of its growth potential.
However, recent performance has been more subdued. The stock has underperformed the broader market over the past year, delivering 3.87% returns against the Sensex's 8.61% gain, resulting in negative alpha of 4.74%. The three-month performance has been particularly challenging, with the stock declining 15.58% compared to the Sensex's 3.45% fall, indicating heightened selling pressure. The stock's beta of 1.35 confirms its high-volatility nature, moving 35% more than the broader market, which amplifies both gains and losses.
Currently trading at ₹477.80, the stock is 20.11% below its 52-week high of ₹598.10 but remains 45.56% above its 52-week low of ₹328.25. Technical indicators suggest a sideways trend, with the stock trading below all major moving averages (5-day, 20-day, 50-day, 100-day, and 200-day), signalling technical weakness that could persist until fundamental catalysts emerge.
"Aditya Vision's premium valuation demands flawless execution and sustained high growth—any stumble could trigger significant multiple compression."
Investment Thesis: Quality Business, Stretched Valuation
The investment thesis for Aditya Vision rests on a foundation of strong operational fundamentals offset by demanding valuation levels. The company has demonstrated impressive growth credentials with a five-year sales CAGR of 30.43% and EBIT growth of 56.26%, establishing itself as a dominant player in Bihar's electronics retail market. The average ROE of 37.54% and ROCE of 27.89% reflect superior capital efficiency and profitability generation capabilities.
The company's quality credentials are further bolstered by zero promoter pledging, growing institutional participation at 35.19%, and a reasonable debt profile with average debt-to-EBITDA of 2.14 times. The regional monopoly in Bihar, with presence across every district, provides competitive moats and pricing power that larger national chains may struggle to replicate in this specific geography.
However, these strengths are already well-reflected in the stock price. The P/E ratio of 57 times and P/BV of 9.60 times leave minimal room for error, whilst the PEG ratio of 4.37 suggests growth expectations are already baked into current valuations. The recent financial trend classification of "FLAT" and technical trend of "SIDEWAYS" indicate momentum has stalled, at least temporarily. The company's Mojo Score of 67 out of 100 translates to a "HOLD" rating, reflecting this balanced risk-reward equation.
Key Strengths & Risk Factors
✅ KEY STRENGTHS
- Superior Returns: ROE of 37.54% and ROCE of 27.89% significantly exceed industry averages, demonstrating excellent capital efficiency
- Strong Growth Track Record: Five-year sales CAGR of 30.43% and EBIT growth of 56.26% validate expansion strategy
- Regional Dominance: Market leadership in Bihar with presence across all districts provides competitive moats
- Zero Promoter Pledging: Clean shareholding structure with no pledged shares indicates financial stability
- Growing Institutional Confidence: Mutual fund holdings surged to 16.81% from 9.53% in two quarters, validating growth story
- Manageable Debt: Debt-to-EBITDA of 2.14 times and elimination of long-term debt demonstrate prudent financial management
- Seasonal Resilience: Ability to capitalise on festive seasons with strong Q1 and Q3 performance demonstrates operational competence
⚠️ KEY CONCERNS
- Expensive Valuation: P/E of 57x, P/BV of 9.60x, and PEG of 4.37x leave minimal margin of safety
- Margin Compression: Operating margin declined 100 bps YoY to 8.16% despite strong revenue growth, indicating competitive pressures
- Negative Operating Cash Flow: FY25 operating cash flow of negative ₹40 crores due to working capital absorption raises sustainability concerns
- High Working Capital Intensity: Current liabilities surged to ₹458.69 crores from ₹209.67 crores, suggesting aggressive supplier credit usage
- Geographic Concentration: Heavy reliance on Bihar market exposes company to regional economic risks
- Intense Competition: E-commerce giants and national retail chains pose significant competitive threats
- Technical Weakness: Stock trading below all major moving averages with sideways trend suggests lack of buying momentum
Outlook: What to Watch in Coming Quarters
🟢 POSITIVE CATALYSTS
- Store Expansion: Continued network expansion across Bihar and potential entry into neighbouring states
- Margin Recovery: Operating leverage kicking in as new stores mature and economies of scale improve
- Market Share Gains: Capitalising on unorganised-to-organised shift in tier-2 and tier-3 cities
- Working Capital Efficiency: Improvement in cash conversion cycle and operating cash flow generation
- Product Mix Enhancement: Higher contribution from premium products and value-added services
🔴 RED FLAGS
- Further Margin Erosion: Continued compression in operating margins below 8% would signal structural challenges
- Sustained Negative Cash Flow: Multiple quarters of negative operating cash flow would raise serious concerns
- Promoter Stake Dilution: Further reduction in promoter holding below 45% without clear strategic rationale
- Inventory Build-up: Excessive inventory accumulation leading to write-offs or clearance sales
- Competitive Intensity: Aggressive pricing by e-commerce players or entry of large national chains in Bihar
The Verdict: Quality Company, Wait for Better Entry
Score: 67/100
For Fresh Investors: Avoid initiating positions at current valuations. Aditya Vision is undoubtedly a high-quality business with strong growth credentials and excellent return ratios, but the stock price has run ahead of fundamentals. With a P/E of 57 times and PEG of 4.37, the risk-reward equation is unfavourable. Wait for a meaningful correction of 20-25% or evidence of sustained margin expansion and cash flow improvement before considering entry. A target entry price around ₹380-400 would offer better margin of safety.
For Existing Holders: Continue holding with a trailing stop-loss around ₹430-440 (10% below current levels). The company's strong fundamentals, regional dominance, and growing institutional backing justify retaining positions accumulated at lower levels. However, avoid adding to positions at current valuations. Monitor quarterly results closely for margin trends and cash flow generation. Consider partial profit booking if the stock rallies back towards ₹550-580 levels, especially if margins fail to show improvement.
Fair Value Estimate: ₹420-450 (12-6% downside from current levels), implying a more reasonable P/E of 47-50 times based on FY26 estimated earnings. Current valuation of ₹477.80 offers limited upside potential unless the company delivers earnings surprises consistently over the next 2-3 quarters.
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, and all investments carry inherent risks including the potential loss of principal.
