Are First Custodian Fund(I) Ltd latest results good or bad?

The latest financial results for First Custodian Fund (I) Ltd reveal significant operational challenges and a decline in business activity. In Q2 FY2026, the company reported net sales of just ₹0.01 crores, reflecting a year-on-year decline of 75.00% from ₹0.04 crores in Q2 FY2025. This drastic drop in revenue indicates a severe contraction in the company's brokerage and securities dealing operations, raising concerns about its market position and operational viability. Net profit for the same quarter was ₹0.02 crores, which, while an improvement from a loss in the previous quarter, represents a staggering 95.83% decline compared to ₹0.49 crores in Q2 FY2025. The reported PAT margin of 200.0% appears inflated due to the minimal revenue base, suggesting that profitability is being artificially supported by other income rather than core business activities. The operating profit margin, excluding other income, was reported at 500.0%, but this figure is misleading given the negligible sales volume. The company's average return on equity (ROE) of 7.78% is considered weak for a financial services entity, and the latest ROE of 2.74% indicates further deterioration in capital efficiency. The balance sheet shows a debt-free status, which is a positive aspect, but the lack of operational infrastructure and strategic investments raises questions about future growth prospects. Overall, the financial performance of First Custodian Fund (I) Ltd highlights a company in distress, struggling to maintain meaningful business activity in a competitive landscape. The company has experienced an adjustment in its evaluation, reflecting the ongoing operational difficulties and market skepticism regarding its ability to recover.