The results paint a concerning picture for the Delhi-based developer, with profitability remaining elusive despite revenue growth. Net sales for Q2 FY26 stood at ₹121.47 crores, marking a 44.95% quarter-on-quarter increase from ₹83.80 crores in Q1 FY26, but declining 10.71% year-on-year from ₹136.04 crores in Q2 FY25. This revenue volatility, coupled with deteriorating margins and mounting operational challenges, has raised serious questions about the company's ability to navigate the competitive real estate landscape.
Quarterly Performance Trend: A Pattern of Instability
| Quarter | Net Sales (₹ Cr) | QoQ Change | Net Profit (₹ Cr) | QoQ Change | Operating Margin |
|---|---|---|---|---|---|
| Sep'25 (Q2 FY26) | 121.47 | +44.95% | -6.62 | +2,182.76% | 4.19% |
| Jun'25 (Q1 FY26) | 83.80 | -25.33% | -0.29 | -98.40% | 16.29% |
| Mar'25 (Q4 FY25) | 112.22 | +27.35% | -18.09 | -1,460.15% | 1.49% |
| Dec'24 (Q3 FY25) | 88.12 | -35.22% | 1.33 | -119.73% | 10.33% |
| Sep'24 (Q2 FY25) | 136.04 | +25.79% | -6.74 | -116.20% | 5.17% |
| Jun'24 (Q1 FY25) | 108.15 | -26.32% | 41.60 | +111.49% | 0.53% |
| Mar'24 (Q4 FY24) | 146.78 | — | 19.67 | — | 12.20% |
Financial Performance: Margin Collapse Drives Losses
The quarter's financial performance reveals a troubling disconnect between revenue growth and profitability. Whilst net sales surged 44.95% sequentially to ₹121.47 crores, operating profit before depreciation, interest, and tax (excluding other income) plummeted to ₹5.09 crores from ₹13.65 crores in Q1 FY26, representing a 62.71% quarter-on-quarter decline. Operating margin (excluding other income) contracted sharply to 4.19% from 16.29% in the previous quarter, indicating severe cost pressures or unfavourable project mix.
The profit before tax (PBT) stood at ₹-6.81 crores in Q2 FY26, a dramatic deterioration from ₹0.58 crores in Q1 FY26. Depreciation charges increased to ₹8.87 crores from ₹10.10 crores sequentially, whilst interest costs remained stable at ₹0.30 crores. The company's tax rate of 2.79% in Q2 FY26 reflects the loss-making status, with minimal tax liability on negative earnings.
On a year-on-year basis, the comparison remains equally concerning. Net profit declined marginally by 1.78% from a loss of ₹6.74 crores in Q2 FY25, indicating persistent inability to achieve profitability despite revenue scale. The PAT margin deteriorated to -5.45% in Q2 FY26 from -4.95% in Q2 FY25, reflecting worsening operational efficiency.
Operational Challenges: Weak Return Metrics Signal Fundamental Issues
Ansal Housing's operational performance reveals deep-rooted structural challenges that extend beyond quarterly volatility. The company's average return on capital employed (ROCE) stands at a meagre 3.69%, whilst the latest ROCE has turned negative at -2.70%, indicating that the company is destroying shareholder value rather than creating it. Even more concerning, the average return on equity (ROE) of 0.40% ranks among the weakest in the real estate sector, with the latest ROE at -1.06%, demonstrating the company's inability to generate meaningful returns for equity shareholders.
The company's balance sheet as of March 2025 shows shareholder funds of ₹139.12 crores against long-term debt of ₹88.49 crores, resulting in a debt-to-equity ratio of approximately 0.64 times. However, the more concerning metric is the average net debt to equity ratio of 2.39 times, indicating high leverage when considering working capital requirements. Current liabilities stood at ₹1,269.26 crores, substantially exceeding current assets of ₹1,444.87 crores, providing a thin liquidity cushion of just ₹175.61 crores.
Critical Alert: Deteriorating Capital Efficiency
Red Flag: The company's ROCE has turned negative at -2.70% in the latest period, down from an already weak average of 3.69%. Combined with an ROE of just 0.40% (average) and currently at -1.06%, Ansal Housing is demonstrating severe capital inefficiency. The average EBIT to interest coverage ratio of -0.11 times indicates that operating earnings are insufficient to cover interest obligations, whilst the debt to EBITDA ratio of 59.92 times reflects an unsustainable debt burden relative to operational cash generation.
Real Estate Sector Context: Underperformance Amid Industry Recovery
The broader Indian real estate sector has shown signs of recovery in recent quarters, with improved demand in residential segments and stabilising commercial real estate markets. However, Ansal Housing's performance stands in stark contrast to this sectoral trend. The company's stock has underperformed the realty sector by 40.33 percentage points over the past year, with Ansal Housing declining 37.74% whilst the broader realty sector posted a modest 2.59% gain.
The company's sales to capital employed ratio of 0.54 times (average) indicates that for every rupee of capital employed, the company generates just 54 paise of revenue, reflecting poor asset utilisation. This metric is particularly concerning in the capital-intensive real estate sector, where efficient deployment of capital is critical for profitability. The five-year sales compound annual growth rate (CAGR) of 26.02% appears impressive on the surface, but this growth has not translated into profitability or improved return metrics, suggesting that the company may be pursuing revenue growth at the expense of margin quality.
Sector Positioning: Struggling to Capitalise on Market Opportunities
Whilst peers in the real estate sector have benefited from improving demand dynamics and better project execution, Ansal Housing continues to grapple with execution challenges, cost overruns, and margin pressures. The company's inability to convert revenue growth into profits, coupled with weak operational metrics, suggests fundamental business model challenges that require urgent strategic intervention. With institutional holdings at a negligible 0.01%, the company has failed to attract professional investor confidence, further limiting access to growth capital.
Peer Comparison: Lagging on Key Metrics
| Company | P/E Ratio (TTM) | P/BV Ratio | ROE (%) | Debt to Equity | Market Cap (₹ Cr) |
|---|---|---|---|---|---|
| Ansal Housing | 20.04 | 0.50 | 0.40% | 2.39 | 70.00 |
| Ansal Buildwell | 9.53 | 0.76 | 7.79% | 0.13 | — |
| Kretto Syscon | 13.14 | 1.11 | 2.16% | -0.04 | — |
The peer comparison reveals Ansal Housing's relative weakness across critical financial metrics. Whilst the company trades at a P/E ratio of 20.04 times, significantly higher than Ansal Buildwell's 9.53 times, its ROE of 0.40% is substantially lower than Ansal Buildwell's 7.79%. The price-to-book value ratio of 0.50 times suggests the market values the company at a 50% discount to its book value, reflecting scepticism about asset quality and future earnings potential. The company's debt-to-equity ratio of 2.39 times is considerably higher than peers, indicating greater financial leverage and risk.
Valuation Analysis: Fair Rating Masks Fundamental Weakness
Despite the challenging operational performance, Ansal Housing's current valuation assessment stands at "Fair" according to recent grading. The stock trades at a P/E ratio of 20.04 times based on trailing twelve-month earnings, which appears reasonable on the surface but masks the underlying volatility and inconsistency of earnings. The price-to-book value ratio of 0.50 times indicates the market is pricing in significant doubt about the company's ability to generate returns on its asset base.
The enterprise value to EBITDA ratio of 13.63 times suggests a moderate valuation multiple, but the negative EV to EBIT ratio of -113.59 times reflects the company's inability to generate consistent operating profits. With the stock trading at ₹9.90 as of November 14, 2025, down 47.40% from its 52-week high of ₹18.82, the valuation has compressed significantly. However, this compression appears justified given the deteriorating fundamentals and negative financial trend.
The company has not paid dividends since September 2016, when it declared ₹0.60 per share, reflecting its inability to generate distributable profits. The dividend payout ratio stands at zero, with all available cash being retained to meet operational and debt obligations. The PEG ratio of 1.66 suggests that the stock is trading at a premium to its growth rate, further questioning the investment case at current levels.
Shareholding Pattern: Stable but Uninspiring
| Category | Sep'25 | Jun'25 | Mar'25 | Dec'24 | QoQ Change |
|---|---|---|---|---|---|
| Promoter | 24.99% | 24.99% | 24.99% | 24.99% | 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% |
| Other DII | 0.01% | 0.01% | 0.01% | 0.01% | 0.00% |
| Non-Institutional | 75.00% | 75.00% | 75.00% | 75.00% | 0.00% |
The shareholding pattern has remained remarkably stable over the past five quarters, with promoter holding locked at 24.99% and non-institutional investors holding 75.00%. The complete absence of foreign institutional investor (FII) participation and negligible mutual fund holdings (0.00%) is a significant red flag, indicating that professional investors have stayed away from the stock. The lack of institutional interest reflects concerns about the company's governance, financial performance, and future prospects. Positively, there is no promoter pledging, which eliminates one potential risk factor.
Stock Performance: Severe Underperformance Across Timeframes
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | +1.96% | +1.62% | +0.34% |
| 1 Month | +0.10% | +3.09% | -2.99% |
| 3 Months | -0.90% | +4.92% | -5.82% |
| 6 Months | -5.71% | +3.97% | -9.68% |
| Year to Date | -45.60% | +8.22% | -53.82% |
| 1 Year | -37.74% | +9.00% | -46.74% |
| 2 Years | +5.32% | +30.23% | -24.91% |
| 3 Years | +103.29% | +37.22% | +66.07% |
The stock's performance trajectory reveals a concerning pattern of recent deterioration despite longer-term gains. Whilst the three-year return of 103.29% significantly outpaced the Sensex's 37.22% gain, delivering positive alpha of 66.07 percentage points, the more recent performance has been dismal. Year-to-date, the stock has plummeted 45.60%, underperforming the Sensex by 53.82 percentage points. The one-year decline of 37.74% against the Sensex's 9.00% gain represents a devastating 46.74 percentage point underperformance.
The stock exhibits high beta characteristics at 1.50, indicating it is 50% more volatile than the broader market. With an annualised volatility of 53.44% over the past year, Ansal Housing falls into the "high risk, low return" category, delivering negative risk-adjusted returns of -0.71 compared to the Sensex's positive risk-adjusted return of 0.73. The stock currently trades below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day moving averages, signalling persistent bearish momentum.
Investment Thesis: Multiple Red Flags Outweigh Limited Positives
The investment thesis for Ansal Housing is overwhelmingly negative across multiple dimensions. The company's quality grade of "Below Average" reflects its weak long-term financial performance, with poor return metrics and high leverage. The current financial trend is classified as "Negative," driven by deteriorating profitability, compressed margins, and weakening operational efficiency. Technical indicators point to a "Mildly Bearish" trend, with the stock trading below all major moving averages and showing persistent downward momentum.
Key Strengths & Risk Factors
✓ Key Strengths
- Long-term sales CAGR of 26.02% demonstrates revenue growth capability
- No promoter pledging eliminates one governance risk
- Stable promoter holding at 24.99% over multiple quarters
- Trading below book value (P/BV: 0.50x) provides downside cushion
- Established brand presence in Delhi-NCR real estate market
⚠ Key Concerns
- Persistent losses with negative ROE of -1.06% and ROCE of -2.70%
- High leverage with debt-to-equity of 2.39 times and debt-to-EBITDA of 59.92 times
- Severe margin compression from 16.29% to 4.19% quarter-on-quarter
- Zero institutional investor participation (FII and MF holdings at 0%)
- Negative financial trend with deteriorating operational metrics
- Stock underperformed sector by 40.33 percentage points over one year
- Weak EBIT to interest coverage at -0.11 times
Outlook: What to Watch
Positive Catalysts
- Sustained revenue growth above ₹120 crores per quarter
- Operating margin recovery above 10% levels
- Return to quarterly profitability with positive PAT
- Debt reduction and improved interest coverage
- Entry of institutional investors signalling confidence
Red Flags to Monitor
- Further margin compression below 4% levels
- Consecutive quarters of losses exceeding ₹5 crores
- Increase in debt levels or deteriorating liquidity
- Promoter stake dilution or pledging
- Continued absence of institutional buying interest
"Ansal Housing's inability to convert revenue growth into profits, coupled with deteriorating return metrics and high leverage, presents a challenging investment proposition with limited near-term catalysts for improvement."
The Verdict: Avoid This Troubled Developer
Score: 9/100
For Fresh Investors: Avoid initiating any position in Ansal Housing. The company exhibits multiple red flags including negative ROE/ROCE, high leverage, persistent losses, margin compression, and zero institutional interest. The "Below Average" quality grade, "Negative" financial trend, and "Mildly Bearish" technical setup create an unfavourable risk-reward equation. Better opportunities exist in the real estate sector with stronger fundamentals and proven execution track records.
For Existing Holders: Consider exiting positions on any near-term price rebounds. The deteriorating financial trajectory, weak operational metrics, and absence of visible turnaround catalysts suggest further downside risk. The stock's severe underperformance versus both the broader market and the realty sector indicates fundamental business challenges that are unlikely to resolve quickly. Redeploy capital to higher-quality real estate stocks with consistent profitability and better return metrics.
Fair Value Estimate: ₹7.50 (24% downside from current levels of ₹9.90). This estimate factors in the company's weak return profile, high leverage, and negative earnings trajectory, whilst acknowledging the discount to book value.
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. Investing in stocks involves risk, including the potential loss of principal.
