The December 2025 quarter results paint a concerning picture for the Indore-based company, which changed its name from Devki Leasing and Finance Limited in September 2022. Whilst year-on-year revenue growth appears impressive at 75.00%, this masks a dramatic sequential collapse that demands investor scrutiny. The company's volatile quarterly performance, coupled with premium valuation metrics and a "Strong Sell" rating from proprietary analysis, suggests significant headwinds ahead.
Financial Performance: Revenue Volatility Undermines Growth Narrative
Agarwal Fortune's Q3 FY26 revenue plummeted to ₹0.77 crores from ₹2.29 crores in Q2 FY26, representing a severe 66.38% quarter-on-quarter decline. This sharp contraction follows a brief period of sequential growth in Q2, when revenue had expanded 7.01% to ₹2.29 crores. The company's inability to sustain revenue momentum raises fundamental questions about order book visibility and demand sustainability in its glass trading operations.
On a year-on-year basis, revenue grew 75.00% from ₹0.44 crores in Q3 FY25, but this comparison is misleading given the exceptionally low base. The December 2024 quarter itself had witnessed a 13.73% sequential decline, suggesting seasonal or operational challenges that persist year after year. For the nine-month period (April-December 2025), the company has generated total revenue of ₹5.20 crores, compared to ₹2.09 crores in the corresponding period of the previous year, representing 148.80% growth. However, this growth appears driven more by volatility than sustainable business expansion.
| Quarter | Revenue (₹ Cr) | QoQ Change | YoY Change | Net Profit (₹ Cr) | PAT Margin |
|---|---|---|---|---|---|
| Dec'25 | 0.77 | -66.38% | +75.00% | 0.01 | 1.30% |
| Sep'25 | 2.29 | +7.01% | +349.02% | 0.01 | 0.44% |
| Jun'25 | 2.14 | -8.15% | +87.72% | 0.03 | 1.40% |
| Mar'25 | 2.33 | +429.55% | N/A | 0.10 | 4.29% |
| Dec'24 | 0.44 | -13.73% | N/A | 0.04 | 9.09% |
| Sep'24 | 0.51 | -55.26% | N/A | 0.04 | 7.84% |
| Jun'24 | 1.14 | N/A | N/A | 0.02 | 1.75% |
Profitability metrics show marginal improvement despite the revenue collapse. Operating profit (PBDIT excluding other income) stood at ₹0.06 crores in Q3 FY26, yielding an operating margin of 7.79%, up from 3.49% in the previous quarter. This margin expansion, whilst positive, appears to be more a function of cost compression rather than operational excellence. Net profit margin improved to 1.30% from 0.44% quarter-on-quarter, though it remains well below the 9.09% achieved in December 2024.
Critical Concern: The company reported zero tax expense in Q3 FY26 despite generating profit before tax of ₹0.01 crores. This pattern has persisted across all recent quarters, with a 0.00% effective tax rate, raising questions about tax loss carry-forwards, accounting practices, or the quality of reported earnings.
Margin Dynamics: Temporary Respite Amid Structural Pressures
Whilst operating margins expanded in Q3 FY26, the improvement appears tactical rather than strategic. The 7.79% operating margin (excluding other income) represents a recovery from the 3.49% reported in Q2, but remains significantly below the 15.91% achieved in December 2024. The company's margin profile has been extraordinarily volatile, ranging from negative territory (-0.88% in June 2024) to double-digit levels within a span of six quarters.
Interest costs declined to ₹0.04 crores in Q3 FY26 from ₹0.06 crores in the previous quarter, providing some relief to profitability. However, the company's average net debt-to-equity ratio of 1.89 indicates elevated leverage that could constrain financial flexibility. With minimal depreciation charges of ₹0.01 crores per quarter, the company appears to operate with limited fixed assets, consistent with its trading-focused business model.
The gross profit margin trajectory tells a concerning story. After reaching 9.09% in December 2024, gross margins compressed to 2.60% in the latest quarter, suggesting either pricing pressure in glass trading markets or unfavourable product mix shifts. PAT margins, whilst improving sequentially to 1.30%, remain anaemic and highly susceptible to any operational headwinds.
Balance Sheet Quality: High Leverage and Minimal Institutional Support
Agarwal Fortune operates with a debt-heavy capital structure, reflected in its average net debt-to-equity ratio of 1.89. This elevated leverage poses refinancing and interest rate risks, particularly for a micro-cap company with volatile cash flows. The company's balance sheet shows minimal cash reserves, with cash and cash equivalents hitting their lowest level in the most recent half-year period, according to financial trend analysis.
The company's return on equity (ROE) stands at 18.00% for the latest period, with a five-year average of 23.98%. Whilst these figures appear respectable on the surface, they must be viewed in context of the high leverage employed. Return on capital employed (ROCE) of 13.46% suggests moderate capital efficiency, though this too is influenced by the company's debt-laden structure.
Quality Assessment: Below Average Fundamentals
Agarwal Fortune carries a "Below Average" quality grade based on long-term financial performance. Whilst the company has delivered impressive five-year sales growth of 52.32%, operating profit (EBIT) growth has been anaemic at just 9.16% over the same period. This divergence between top-line and bottom-line growth indicates margin compression and operational challenges. Institutional holdings stand at 0.0%, reflecting minimal confidence from sophisticated investors. The company lacks any mutual fund, FII, or insurance company participation in its shareholder base.
Industry Context: Navigating the Industrial Products Landscape
Agarwal Fortune operates in the industrial products sector, specifically in glass trading and allied activities. The company's business model appears heavily dependent on procurement and distribution rather than manufacturing, as evidenced by minimal depreciation charges and low fixed asset intensity. This trading-oriented approach exposes the company to margin compression during periods of price volatility or competitive intensity.
The industrial products sector in India has delivered robust returns, with the sector index generating 26.99% returns over the past year. However, Agarwal Fortune has significantly underperformed this benchmark, posting negative returns of -2.32% over the same period. This 29.31 percentage point underperformance highlights company-specific challenges that extend beyond sector dynamics.
Peer Comparison: Premium Valuation Without Commensurate Quality
| Company | P/E (TTM) | P/BV | ROE (%) | Debt/Equity | Div Yield |
|---|---|---|---|---|---|
| Agarwal Fortune | 40.98 | 7.38 | 23.98% | 1.89 | NA |
| Admach Systems | 23.76 | 6.80 | 0.0% | 0.00 | NA |
| Apollo Techno | 13.39 | N/A | 0.0% | 0.00 | NA |
| Shilp Gravures | 13.35 | 1.09 | 9.48% | -0.31 | 1.15% |
| Gabion Technol. | 16.46 | 4.19 | 0.0% | 0.00 | NA |
| Rishiroop | 9.51 | 0.68 | 13.81% | -0.08 | 1.46% |
Agarwal Fortune trades at a significant premium to its industrial products peers across key valuation metrics. The company's P/E ratio of 40.98x is nearly double the peer average of approximately 15x, whilst its price-to-book value of 7.38x dwarfs the peer average of roughly 3.2x. This valuation premium appears unjustified given the company's volatile revenue profile, below-average quality grade, and minimal institutional support.
The company's ROE of 23.98% does exceed most peers, which could partially justify a valuation premium. However, this return is achieved through elevated leverage (debt-to-equity of 1.89) rather than superior operational efficiency. Peers like Rishiroop and Shilp Gravures operate with negative net debt positions whilst delivering respectable returns, suggesting more sustainable business models.
Valuation Analysis: Expensive Across All Metrics
Agarwal Fortune carries a "Very Expensive" valuation grade, having held this classification since August 2023. The company's P/E ratio of 40.98x compares unfavourably to the industrial products sector P/E of 23x, representing a 78.17% premium to sector multiples. This premium appears difficult to justify given the company's flat financial trend, below-average quality, and deteriorating quarterly performance.
The price-to-book value of 7.38x suggests the market is pricing in significant future growth and return expansion. However, with operating profit growth of just 9.16% over five years and highly volatile quarterly results, this optimism appears misplaced. The company's EV/EBITDA multiple of 9.27x and EV/Sales ratio of 1.29x further underscore the expensive valuation, particularly for a micro-cap trading business with minimal barriers to entry.
| Metric | Value | Assessment |
|---|---|---|
| P/E Ratio (TTM) | 40.98x | Premium to sector (23x) |
| P/BV Ratio | 7.38x | Significantly elevated |
| EV/EBITDA | 9.27x | Expensive for trading business |
| EV/Sales | 1.29x | High for low-margin operation |
| PEG Ratio | 0.32x | Growth-adjusted appears reasonable |
The stock currently trades at ₹21.47, approximately 14.33% below its 52-week high of ₹25.06 but 30.12% above its 52-week low of ₹16.50. This positioning in the upper half of the annual range, combined with premium valuation metrics, suggests limited upside potential and significant downside risk should operational challenges persist.
Shareholding Pattern: Stable but Concerning Ownership Structure
| Category | Dec'25 | Sep'25 | Jun'25 | Mar'25 | QoQ Change |
|---|---|---|---|---|---|
| Promoter | 49.32% | 49.32% | 49.32% | 49.32% | 0.00% |
| FII | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
| Mutual Funds | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
| Insurance | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
| Other DII | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
| Non-Institutional | 50.68% | 50.68% | 50.68% | 50.68% | 0.00% |
Agarwal Fortune's shareholding pattern has remained completely static over the past five quarters, with promoter holding steady at 49.32% and non-institutional investors holding the remaining 50.68%. The complete absence of institutional participation—zero holdings from FIIs, mutual funds, insurance companies, and other domestic institutional investors—represents a significant red flag.
Sophisticated institutional investors conduct rigorous due diligence before deploying capital, and their complete absence from Agarwal Fortune's shareholder base suggests fundamental concerns about the business model, governance, or growth prospects. The promoter holding of 49.32%, whilst substantial, falls short of majority control and has shown no increase despite the company's claimed growth trajectory. Positively, there is no promoter pledging, eliminating one potential governance concern.
Stock Performance: Significant Underperformance Across Timeframes
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Day | +4.99% | -0.05% | +5.04% |
| 1 Week | -0.37% | +0.50% | -0.87% |
| 1 Month | +29.65% | +0.79% | +28.86% |
| 3 Months | -2.41% | +0.43% | -2.84% |
| 6 Months | -1.96% | +4.50% | -6.46% |
| YTD | +17.64% | -1.16% | +18.80% |
| 1 Year | -2.32% | +10.41% | -12.73% |
| 2 Years | -24.37% | +17.65% | -42.02% |
Agarwal Fortune's stock performance has been characterised by extreme volatility and significant underperformance across most meaningful timeframes. Over the past year, the stock has declined 2.32% whilst the Sensex gained 10.41%, resulting in negative alpha of 12.73 percentage points. The two-year performance is even more concerning, with the stock down 24.37% against the Sensex's 17.65% gain, producing negative alpha of 42.02 percentage points.
The stock exhibits high beta of 1.50, indicating it is 50% more volatile than the broader market. This elevated volatility, combined with negative returns, places the stock in the "High Risk Low Return" category. The risk-adjusted return of -0.04 over one year compares unfavourably to the Sensex's risk-adjusted return of 0.90, highlighting the poor risk-reward profile.
Recent price action shows the stock trading above all key moving averages (5-day, 20-day, 50-day, 100-day, and 200-day), which might appear positive on the surface. However, technical indicators present a mixed picture, with the overall trend classified as "Sideways" as of February 11, 2026. The stock changed from "Mildly Bearish" to "Sideways" on the same day, suggesting no clear directional conviction.
Investment Thesis: Multiple Red Flags Outweigh Limited Positives
The investment case for Agarwal Fortune faces significant headwinds across multiple dimensions. The company's proprietary score of 27 out of 100 places it firmly in "Strong Sell" territory, with the rating unchanged since September 2025. This score reflects a combination of flat financial performance, weak long-term fundamental strength, expensive valuation, and unfavourable technical positioning.
The "Flat" financial trend designation for Q3 FY26 stems from multiple concerning factors: cash and cash equivalents hitting their lowest level, operating profit (PBDIT) at its quarterly nadir of ₹0.06 crores, profit before tax excluding other income at just ₹0.01 crores, and earnings per share at their lowest quarterly level of ₹0.03. These metrics collectively suggest deteriorating operational performance rather than temporary headwinds.
KEY STRENGTHS
- Strong average ROE of 23.98% demonstrates capital efficiency
- Impressive five-year sales CAGR of 52.32% shows top-line growth capability
- No promoter pledging eliminates governance concerns
- Operating margin improvement to 7.79% in Q3 FY26
- Stable promoter holding at 49.32% for five quarters
KEY CONCERNS
- Severe revenue volatility with 66.38% QoQ decline in Q3 FY26
- Zero institutional participation signals lack of sophisticated investor confidence
- High leverage with debt-to-equity ratio of 1.89
- Anaemic operating profit growth of just 9.16% over five years
- Premium valuation (P/E 40.98x) unjustified by fundamentals
- Below average quality grade and flat financial trend
- High beta of 1.50 with negative risk-adjusted returns
Outlook: What Lies Ahead for Investors
POSITIVE CATALYSTS
- Sequential margin improvement if sustained in Q4 FY26
- Revenue stabilisation above ₹2 crore quarterly run-rate
- Entry of institutional investors signalling confidence
- Debt reduction to improve financial flexibility
- Diversification beyond glass trading to reduce volatility
RED FLAGS TO MONITOR
- Further sequential revenue decline in Q4 FY26
- Margin compression reverting to Q2 FY26 levels
- Continued absence of institutional participation
- Increase in debt levels or deterioration in interest coverage
- Promoter stake reduction or pledging
- Valuation remaining expensive despite operational challenges
The outlook for Agarwal Fortune remains challenging given the confluence of operational volatility, expensive valuation, and minimal institutional support. Investors should closely monitor Q4 FY26 results to assess whether the Q3 revenue collapse represents a temporary blip or signals deeper business model challenges. The company's ability to sustain margins whilst stabilising revenue will be critical to any reassessment of the investment case.
The Verdict: Exit Recommended on Fundamental Concerns
Score: 27/100
For Fresh Investors: Avoid initiating positions. The combination of severe revenue volatility, expensive valuation (P/E 40.98x), below-average quality grade, and complete absence of institutional participation presents an unfavourable risk-reward profile. The company's flat financial trend and weak long-term operating profit growth (9.16% CAGR) do not justify premium multiples.
For Existing Holders: Consider exiting positions. The 66.38% sequential revenue decline in Q3 FY26, coupled with deteriorating cash position and minimal institutional interest, suggests fundamental business challenges. With the stock trading at 7.38x book value despite operational headwinds, current valuations offer an opportunity to exit before potential further deterioration.
Fair Value Estimate: ₹12.00-14.00 (44%-35% downside from current levels of ₹21.47), based on normalised P/E of 20x applied to sustainable earnings and adjusted for quality concerns.
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.
