The Gurgaon-based company, which provides IT solutions to government and mid-market clients, has witnessed extraordinary revenue expansion in recent quarters. Net sales for Q2 FY26 stood at ₹5.61 crores, representing a staggering 419.44% year-on-year increase from ₹1.08 crores in Q2 FY25. However, this revenue surge has not translated into proportionate profitability gains, raising questions about operational efficiency and cost management.
The company's operating profit margin (excluding other income) stood at 6.95% in Q2 FY26, a marked improvement from the negative margins witnessed in the year-ago period but still modest by industry standards. The net profit margin of 1.78% highlights the thin profitability cushion the company operates with, making it vulnerable to any operational headwinds or cost pressures.
Financial Performance: Revenue Explosion Masks Profitability Concerns
Anka India's quarterly financial performance reveals a company in transition, experiencing dramatic revenue growth whilst struggling to establish consistent profitability. In Q2 FY26, net sales reached ₹5.61 crores, declining 4.75% quarter-on-quarter from ₹5.89 crores in Q1 FY26 but surging 419.44% year-on-year. This sequential decline is noteworthy, as Q1 FY26 had witnessed an extraordinary 144.40% quarter-on-quarter jump in revenue, suggesting volatility in the company's revenue streams.
| Quarter | Net Sales (₹ Cr) | QoQ Change | Net Profit (₹ Cr) | YoY Change | PAT Margin |
|---|---|---|---|---|---|
| Sep'25 | 5.61 | -4.75% | 0.10 | -128.57% | 1.78% |
| Jun'25 | 5.89 | +144.40% | -0.01 | -80.00% | -0.17% |
| Sep'24 | 2.41 | +141.00% | 0.04 | -87.50% | 1.66% |
| Dec'23 | 1.00 | -7.41% | 0.11 | — | 11.00% |
| Sep'23 | 1.08 | +1100.00% | -0.35 | — | -32.41% |
| Jun'23 | 0.09 | -81.63% | -0.05 | — | -55.56% |
| Mar'23 | 0.49 | — | 0.32 | — | 65.31% |
The operating profit (PBDIT) excluding other income stood at ₹0.39 crores in Q2 FY26, representing a margin of 6.95%. Whilst this marks a significant improvement from the loss-making quarters of FY24, it remains substantially below the 51.02% operating margin achieved in March 2023, indicating that the company's cost structure has ballooned alongside revenue expansion.
Employee costs have emerged as a major pressure point. In Q2 FY26, employee expenses stood at ₹4.70 crores, up from ₹4.58 crores in Q1 FY26 and dramatically higher than the ₹1.54 crores recorded in Q2 FY25. This represents a near-tripling of employee costs year-on-year, suggesting aggressive hiring or compensation increases that have outpaced revenue growth on a profitability basis.
Operational Challenges: Capital Efficiency Remains Weak
Anka India's operational metrics paint a concerning picture of capital inefficiency and weak fundamental strength. The company's return on equity (ROE) stands at a meagre 0.89%, significantly below industry benchmarks and indicative of poor returns generated on shareholder capital. This low ROE reflects the company's struggle to convert its equity base into meaningful profits, a critical weakness for any business seeking to create long-term shareholder value.
The return on capital employed (ROCE) presents an even more troubling picture at -1.57% for the latest period, with a five-year average of -3.39%. Negative ROCE indicates that the company is destroying value rather than creating it, earning less from its operations than the cost of the capital employed. This metric is particularly concerning for a company attempting to scale its operations, as it suggests that growth is not being achieved efficiently.
Critical Concern: Value Destruction
Negative ROCE Alert: With a five-year average ROCE of -3.39% and latest ROCE at -1.57%, Anka India has consistently destroyed shareholder value. The company earns insufficient returns on the capital employed in its business, raising fundamental questions about the sustainability of its business model and growth strategy.
Weak ROE: At just 0.89%, the company's return on equity lags far behind industry standards, indicating poor capital efficiency and limited profitability on shareholder funds.
The company's balance sheet as of March 2023 reveals a precarious financial position. Shareholder funds stood at ₹5.08 crores, comprising share capital of ₹8.74 crores offset by negative reserves of ₹7.85 crores. This negative reserve position indicates accumulated losses over time, a red flag for investors assessing the company's financial health.
Current liabilities of ₹8.58 crores exceed the company's fixed assets of ₹1.75 crores and current assets of ₹0.67 crores, suggesting potential working capital pressures. The company's sales to capital employed ratio averages just 0.08x, indicating that the company generates only ₹0.08 in sales for every rupee of capital employed—an extremely low figure that underscores operational inefficiency.
The Profitability Paradox: Growth Without Returns
Anka India exemplifies a troubling phenomenon in micro-cap stocks: explosive revenue growth that fails to translate into sustainable profitability. The company's net sales have surged from negligible levels in early 2023 to over ₹5 crores per quarter by mid-2025, yet margins remain wafer-thin and profitability inconsistent.
Other income has played a disproportionate role in the company's profit generation. In Q2 FY26, other income contributed ₹0.21 crores, representing 35% of the total operating profit (PBDIT) of ₹0.60 crores. This heavy reliance on non-operating income to achieve profitability raises concerns about the core business's ability to generate sustainable earnings.
Quality of Earnings Concern
The company's profit before tax of ₹0.10 crores in Q2 FY26 includes ₹0.21 crores of other income. Excluding this non-operating income, the company would have reported an operating loss. This pattern of relying on other income to achieve headline profitability is a significant red flag regarding earnings quality and business sustainability.
Interest costs, whilst modest at ₹0.10 crores in Q2 FY26, have increased from negligible levels in prior periods, indicating growing debt obligations. Depreciation expenses of ₹0.41 crores in Q2 FY26 represent a substantial charge relative to the company's operating profit, further pressuring margins.
| Metric | Q2 FY26 | Q1 FY26 | Q2 FY25 | Assessment |
|---|---|---|---|---|
| Operating Profit (Excl OI) | ₹0.39 Cr | ₹0.42 Cr | ₹0.07 Cr | Improving but low |
| Other Income | ₹0.21 Cr | ₹0.12 Cr | ₹0.34 Cr | High dependency |
| Employee Costs | ₹4.70 Cr | ₹4.58 Cr | ₹1.54 Cr | Surging costs |
| Depreciation | ₹0.41 Cr | ₹0.42 Cr | ₹0.23 Cr | Elevated charge |
Industry Context: Struggling in a Competitive Landscape
The diversified consumer products sector, in which Anka India is classified, has faced significant headwinds over the past year, with the sector delivering a negative 27.72% return. Anka India's 73.24% one-year return significantly outperformed this sector benchmark, suggesting relative strength despite fundamental weaknesses. However, this outperformance appears driven more by the stock's micro-cap volatility and low liquidity rather than fundamental business strength.
The company's classification as a "High Beta" stock with a beta of 1.50 indicates that it is 50% more volatile than the broader market. This elevated volatility, combined with a risk-adjusted return of 1.28 and volatility of 57.26%, places Anka India firmly in the "high risk, high return" category—suitable only for aggressive investors with high risk tolerance.
Peer Comparison: Valuation Disconnect from Fundamentals
A comparison with peers in the diversified consumer products sector reveals Anka India's valuation anomaly. The company trades at a price-to-earnings ratio of 754.88x, dramatically higher than the sector average of approximately 42x and peers such as Exxaro Tiles (47.98x) and Pil Italica Lifestyle (45.80x).
| Company | P/E (TTM) | P/BV | ROE | Debt/Equity |
|---|---|---|---|---|
| Anka India | 754.88x | 6.72x | 0.89% | 0.08 |
| Exxaro Tiles | 47.98x | 1.16x | 1.54% | 0.30 |
| OK Play India | NA (Loss Making) | 1.43x | 1.36% | 0.61 |
| Pil Italica Lifestyle | 45.80x | 2.50x | 5.80% | 0.16 |
| Murudeshwar Ceramics | 19.30x | 0.52x | 1.96% | 0.33 |
| K. V. Toys India | 56.29x | 20.40x | 0.00% | 0.00 |
This extreme P/E multiple is unjustifiable given Anka India's weak fundamentals. The company's ROE of 0.89% is amongst the lowest in the peer group, trailing Pil Italica Lifestyle's 5.80% and Murudeshwar Ceramics' 1.96%. Despite this inferior return profile, Anka India trades at a price-to-book value of 6.72x, substantially higher than most peers and second only to K. V. Toys India's 20.40x.
The valuation disconnect becomes even more apparent when considering the company's market capitalisation of ₹189.00 crores against peers with similar or superior fundamentals. This overvaluation likely reflects the stock's illiquidity and speculative trading rather than any fundamental justification.
Valuation Analysis: Extreme Overvaluation Poses Significant Risk
Anka India's valuation metrics uniformly signal extreme overvaluation relative to both historical norms and peer benchmarks. The company's P/E ratio of 754.88x implies that investors are paying ₹754.88 for every rupee of trailing twelve-month earnings—a valuation typically reserved for high-growth technology companies with demonstrated scalability and strong unit economics, neither of which Anka India possesses.
The price-to-book value of 6.72x indicates that the stock trades at nearly seven times its book value per share of ₹1.02. This premium is difficult to justify for a company with negative reserves, minimal profitability, and weak returns on equity. The EV/EBITDA ratio of 183.46x further confirms the overvaluation, as does the EV/Sales ratio of 12.30x.
The company's valuation grade has been classified as "Risky" since April 2023, and the overall Mojo score of 17 out of 100 places it firmly in "Strong Sell" territory. This low score reflects the confluence of weak fundamentals, deteriorating financial trends, bearish technical indicators, and extreme overvaluation.
"At 754 times earnings and 6.7 times book value, Anka India's valuation bears no relationship to its fundamental reality—a micro-cap business generating razor-thin margins with negative capital returns."
Shareholding Pattern: Dramatic Promoter Consolidation
The shareholding pattern of Anka India reveals an extraordinary development in Q3 FY26 (October-December 2025): promoter holding surged from 16.42% in September 2025 to 91.29% in December 2025, representing a massive 74.87 percentage point increase in a single quarter. This dramatic consolidation of ownership saw non-institutional holdings plummet from 83.58% to just 8.71%.
| Quarter | Promoter % | QoQ Change | FII % | MF % | Non-Institutional % |
|---|---|---|---|---|---|
| Dec'25 | 91.29% | +74.87% | 0.00% | 0.00% | 8.71% |
| Sep'25 | 16.42% | 0.00% | 0.00% | 0.00% | 83.58% |
| Jun'25 | 16.42% | -38.58% | 0.00% | 0.00% | 83.58% |
| Mar'25 | 55.00% | 0.00% | 0.00% | 0.00% | 45.00% |
| Dec'24 | 55.00% | — | 0.00% | 0.00% | 45.00% |
This shareholding restructuring could be interpreted in multiple ways. On one hand, it demonstrates promoter confidence and commitment to the business. On the other hand, the complete absence of institutional investors—with zero holdings from FIIs, mutual funds, insurance companies, and other domestic institutional investors—is a significant red flag. Quality companies typically attract institutional participation, and the complete lack thereof suggests institutional investors have evaluated and rejected the investment opportunity.
The key promoters include Amit Sharma (0.599%), Arjit Sachdeva (0.15%), Sulakashana Trikha (0.064%), Raman Trikha (0.054%), and Raman Trikha Entertainment Private Limited (0.047%). Positively, there is no promoter pledging, eliminating one potential risk factor.
Stock Performance: Volatility Dominates Price Action
Anka India's stock performance reflects the extreme volatility characteristic of illiquid micro-cap stocks. Over the past year, the stock has delivered a 73.24% return, substantially outperforming the Sensex's 6.56% gain and generating a positive alpha of 66.68%. However, this outperformance comes with extraordinary volatility of 57.26%, more than five times the Sensex's 11.24% volatility.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | -12.06% | -2.43% | -9.63% |
| 1 Month | -0.40% | -4.66% | +4.26% |
| 3 Months | -40.21% | -3.57% | -36.64% |
| 6 Months | +2.78% | -1.44% | +4.22% |
| YTD | -21.92% | -4.32% | -17.60% |
| 1 Year | +73.24% | +6.56% | +66.68% |
| 2 Years | +127.36% | +15.87% | +111.49% |
| 3 Years | +44.95% | +33.80% | +11.15% |
Recent performance has been particularly concerning. The stock has declined 40.21% over the past three months, dramatically underperforming the Sensex's 3.57% decline. Year-to-date, the stock is down 21.92% compared to the Sensex's 4.32% decline. The stock currently trades at ₹35.15, down 50.57% from its 52-week high of ₹71.11 but still 154.53% above its 52-week low of ₹13.81.
Technical indicators present a uniformly bearish picture. The stock trades below all key moving averages—5-day (₹39.24), 20-day (₹40.55), 50-day (₹44.27), 100-day (₹51.24), and 200-day (₹43.51). The overall technical trend has shifted to "Mildly Bearish" as of January 23, 2026, with MACD, Bollinger Bands, moving averages, KST, and Dow Theory all signalling bearish or mildly bearish conditions on the weekly timeframe.
Investment Thesis: Multiple Red Flags Outweigh Growth Story
The investment case for Anka India is severely compromised by a confluence of fundamental, valuation, and quality concerns that far outweigh any potential positives from revenue growth. The company's Mojo score of 17 out of 100 reflects this harsh reality across four key dimensions:
The quality assessment categorises Anka India as a "Below Average" quality company based on long-term financial performance. Key quality detractors include zero sales growth over five years, negative 4.08% EBIT growth, weak average EBIT to interest coverage of -0.46x, negative average ROCE of -3.39%, and minimal average ROE of 0.89%. The complete absence of institutional holdings (0.0%) further validates this poor quality assessment.
Key Strengths & Risk Factors
KEY STRENGTHS
- Explosive revenue growth of 419.44% YoY in Q2 FY26 demonstrates business traction
- Return to profitability in Q2 FY26 after Q1 FY26 loss shows operational improvement
- Operating margins (excluding other income) turned positive at 6.95% after extended period of losses
- No promoter pledging eliminates one key governance risk
- Dramatic promoter stake increase to 91.29% demonstrates insider confidence
- Low debt levels with debt-to-equity of just 0.08 provides financial flexibility
- One-year stock return of 73.24% substantially outperformed Sensex by 66.68%
KEY CONCERNS
- Razor-thin PAT margin of 1.78% leaves no room for error or cost pressures
- Negative ROCE of -1.57% indicates value destruction rather than creation
- Minimal ROE of 0.89% reflects extremely poor returns on shareholder equity
- Heavy reliance on other income to achieve profitability raises earnings quality concerns
- Extreme P/E valuation of 754.88x has no fundamental justification
- Complete absence of institutional investors signals lack of professional validation
- Sequential revenue decline of 4.75% QoQ suggests growth sustainability issues
- Employee costs surged 205% YoY, far outpacing revenue growth on profitability basis
- Negative reserves of ₹7.85 crores indicate accumulated historical losses
- Stock down 40.21% over three months with bearish technical indicators
Outlook: What to Watch
POSITIVE CATALYSTS
- Sustained quarterly profitability with improving margins above 10%
- Revenue growth accompanied by proportionate margin expansion
- ROCE turning positive and trending towards industry benchmarks
- Institutional investor participation signalling quality validation
- Reduction in reliance on other income for profitability
RED FLAGS
- Return to quarterly losses or further margin compression
- Continued sequential revenue decline indicating growth stalling
- Further deterioration in ROCE or ROE metrics
- Increased debt levels to fund operations due to weak cash generation
- Stock breaking below ₹30 support level on technical charts
The Verdict: Avoid This Speculative Micro-Cap
Score: 17/100
For Fresh Investors: Avoid completely. The stock's extreme valuation of 754x earnings combined with weak fundamentals (0.89% ROE, negative ROCE), flat financial trends, and bearish technicals present an unfavourable risk-reward profile. The complete absence of institutional investors and razor-thin margins make this a highly speculative investment unsuitable for most portfolios.
For Existing Holders: Consider exiting positions, particularly if holding unrealised gains. The 40% decline over three months and mildly bearish technical trend suggest further downside risk. The fundamental disconnect between valuation and business quality is unsustainable.
Fair Value Estimate: ₹8-12 (65-77% downside from current price of ₹35.15)
Anka India represents a cautionary tale of micro-cap speculation disconnected from fundamental reality. Whilst the company has achieved impressive revenue growth, this has not translated into meaningful profitability or shareholder value creation. The combination of extreme overvaluation, weak capital efficiency, deteriorating technicals, and absence of institutional validation makes this stock unsuitable for all but the most aggressive speculators willing to accept substantial downside risk.
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.
