Trading at ₹65.30 with a market capitalisation of just ₹28.00 crores, the stock fell 7.89% on February 13, 2026, reflecting investor unease following the quarterly results. Whilst the year-on-year comparison appears favourable, a deeper examination reveals significant operational challenges including margin compression, volatile profitability metrics, and a concerning decline in promoter shareholding.
The results reveal a company grappling with operational inconsistency. Whilst revenue growth of 57.14% year-on-year appears impressive, the sequential deceleration in profitability alongside a dramatic collapse in operating margins from 59.65% in Q2 to just 25.62% in Q3 signals underlying execution challenges that merit close scrutiny.
| Quarter | Net Sales (₹ Cr) | QoQ Growth | Net Profit (₹ Cr) | QoQ Growth | PAT Margin |
|---|---|---|---|---|---|
| Dec'25 (Q3) | ₹1.21 | +6.14% | ₹0.21 | -32.26% | 17.36% |
| Sep'25 (Q2) | ₹1.14 | +9.62% | ₹0.31 | -11.43% | 27.19% |
| Jun'25 (Q1) | ₹1.04 | -57.38% | ₹0.25 | 0.00% | 24.04% |
| Mar'25 (Q4) | ₹2.44 | +216.88% | ₹0.35 | +191.67% | 14.34% |
| Dec'24 (Q3) | ₹0.77 | -7.23% | ₹0.02 | -81.54% | 2.63% |
| Sep'24 (Q2) | ₹0.83 | +10.67% | ₹0.65 | +96.97% | 78.31% |
| Jun'24 (Q1) | ₹0.75 | — | ₹0.33 | — | 44.00% |
Financial Performance: Margin Compression Overshadows Revenue Growth
In Q3 FY26, Bazel International generated net sales of ₹1.21 crores, marking a 57.14% year-on-year increase from ₹0.77 crores in Q3 FY25. On a sequential basis, revenue grew a modest 6.14% from ₹1.14 crores in Q2 FY26. However, this revenue expansion failed to translate into proportional bottom-line growth, exposing significant operational inefficiencies.
The company's operating profit margin (excluding other income) collapsed to 25.62% in Q3 from 59.65% in Q2 FY26 and 43.42% in Q3 FY25. This dramatic compression of 34 percentage points quarter-on-quarter represents the most concerning aspect of the results. The PAT margin similarly deteriorated to 17.36% from 27.19% in the previous quarter, indicating that cost pressures are intensifying across the business.
Employee costs surged to ₹0.25 crores in Q3 from ₹0.21 crores in Q2, whilst interest expenses declined to ₹0.11 crores from ₹0.22 crores. The tax rate exhibited unusual volatility, recording a negative 46.67% in Q3 compared to 38.00% in Q2, suggesting either tax adjustments or losses in certain business segments that require further disclosure from management.
Nine-Month Performance: Mixed Signals
For the nine-month period ending December 2025 (9M FY26), Bazel International reported consolidated net sales of ₹3.39 crores with a consolidated net profit of ₹0.77 crores. Whilst this represents growth over the comparable period, the sequential quarterly deterioration in margins raises questions about the quality and sustainability of this growth trajectory.
Operational Challenges: Weak Capital Efficiency Persists
Bazel International's return on equity (ROE) stood at just 3.90% for the latest quarter, marginally above the five-year average of 2.94%. This represents one of the most significant structural weaknesses in the investment thesis. An ROE below 4% indicates extremely poor capital efficiency, suggesting the company is generating minimal returns for its shareholders relative to the equity base deployed in the business.
The company's return on capital employed (ROCE) of 4.87% similarly reflects suboptimal capital allocation. For context, investors typically seek ROE levels above 15% for quality businesses, making Bazel International's single-digit returns particularly concerning. This weak profitability profile limits the company's ability to reinvest in growth initiatives or reward shareholders through dividends.
The balance sheet reveals shareholder funds of ₹51.09 crores as of March 2025, up from ₹43.93 crores in March 2024, primarily driven by retained earnings. The company maintains zero long-term debt, which is positive from a financial risk perspective. However, current liabilities surged to ₹28.46 crores from ₹12.82 crores year-on-year, warranting scrutiny of working capital management practices.
⚠️ Critical Concern: Earnings Volatility
The quarterly earnings pattern reveals extreme volatility, with net profit ranging from ₹0.02 crores (Dec'24) to ₹0.65 crores (Sep'24) over the past seven quarters. Such inconsistency makes financial forecasting nearly impossible and suggests the business lacks stable, recurring revenue streams characteristic of quality NBFCs.
Industry Context: Struggling in a Competitive NBFC Landscape
The NBFC sector in India has witnessed robust growth driven by credit demand, financial inclusion initiatives, and regulatory support. However, Bazel International's performance lags considerably behind industry standards. The company's 2.94% average ROE pales in comparison to well-managed NBFCs that typically deliver ROEs in the 15-20% range, highlighting a significant competitive disadvantage.
With a micro-cap market capitalisation of just ₹28.00 crores, Bazel International operates at the smallest end of the NBFC spectrum. The company's business model focuses on trading in shares, financial services, and investment activities, but lacks the scale and specialisation of larger, more established players in segments such as vehicle finance, microfinance, or housing finance.
The broader NBFC industry faces headwinds from rising interest rates, asset quality concerns, and increased regulatory scrutiny. Smaller NBFCs like Bazel International are particularly vulnerable to funding cost pressures and competitive intensity from banks expanding their retail lending operations.
Peer Comparison: Valuation Disconnect from Fundamentals
A comparison with peer NBFCs reveals Bazel International's positioning within the micro-cap financial services space. Whilst the company trades at a seemingly attractive price-to-earnings ratio of 11.55x and price-to-book value of 0.45x, these low multiples reflect fundamental weaknesses rather than value opportunities.
| Company | P/E (TTM) | P/BV | ROE (%) | Debt/Equity |
|---|---|---|---|---|
| Bazel International | 11.55 | 0.45 | 2.94% | 0.36 |
| Swati Projects | 8.72 | 1.97 | 13.38% | 0.07 |
| Dynamic Portfolio | 177.25 | 2.20 | 0.97% | 0.07 |
| Purshottam Invest | 37.44 | 0.52 | 8.48% | 0.34 |
| Vertex Securities | NA (Loss Making) | 3.42 | 3.39% | 0.87 |
Bazel International's 2.94% ROE ranks near the bottom of its peer group, exceeded only by Dynamic Portfolio's 0.97%. The company's P/BV ratio of 0.45x, whilst appearing attractive on the surface, reflects the market's assessment that the company's assets are unlikely to generate adequate returns. In contrast, peers with stronger ROE profiles such as Swati Projects (13.38% ROE) command higher P/BV multiples of 1.97x, demonstrating the market's willingness to pay premiums for superior capital efficiency.
Valuation Analysis: Low Multiples Reflect Fundamental Weakness
Bazel International's valuation metrics superficially suggest an undervalued stock. The P/E ratio of 11.55x compares favourably to the industry average P/E of 23x, whilst the P/BV ratio of 0.45x trades at a significant discount to book value. However, these low multiples represent a "value trap" rather than a genuine opportunity, given the company's structural profitability challenges.
The company's enterprise value-to-EBITDA multiple of 10.31x and EV-to-sales ratio of 6.30x appear elevated relative to the modest revenue base and inconsistent cash generation. With no dividend yield and a PEG ratio marked as not applicable, the stock offers no income component to offset the capital appreciation uncertainty.
The proprietary Mojo Score of 37 out of 100 assigns a "SELL" rating, reflecting concerns about bearish technical trends, flat financial performance, and weak long-term fundamental strength. The score has fluctuated between "Strong Sell" and "Sell" categories over recent months, indicating persistent challenges that have prevented any sustained improvement in the investment outlook.
Shareholding Pattern: Promoter Exit Raises Red Flags
One of the most alarming developments surrounding Bazel International is the dramatic decline in promoter shareholding. Promoter stake has plummeted from 0.32% in March 2025 to just 0.08% in December 2025, representing a 75% reduction in promoter holdings over three quarters. This sustained selling by promoters—the individuals most knowledgeable about the company's prospects—sends a deeply concerning signal to minority shareholders.
| Quarter | Promoter % | QoQ Change | FII % | MF % | Non-Institutional % |
|---|---|---|---|---|---|
| Dec'25 | 0.08% | -0.03% | 0.00% | 0.00% | 99.92% |
| Sep'25 | 0.11% | -0.01% | 0.00% | 0.00% | 99.89% |
| Jun'25 | 0.12% | -0.20% | 0.00% | 0.00% | 99.88% |
| Mar'25 | 0.32% | 0.00% | 0.00% | 0.00% | 99.68% |
The shareholding structure reveals virtually no institutional participation, with zero holdings from foreign institutional investors, mutual funds, or insurance companies. Non-institutional shareholders—predominantly retail investors—control 99.92% of the company. This complete absence of institutional validation further underscores the investment risks, as sophisticated investors have clearly chosen to avoid this stock.
The lack of institutional interest also translates into poor liquidity, making it difficult for investors to exit positions without significant price impact. Combined with the micro-cap market capitalisation, this creates a high-risk profile unsuitable for most portfolios.
Investment Thesis: Multiple Red Flags Outweigh Low Valuation
The investment case for Bazel International faces significant headwinds across multiple dimensions. The company's financial trend is classified as "Flat" despite year-on-year profit growth, reflecting concerns about sustainability and consistency. The technical trend remains bearish, with the stock declining 7.89% in recent trading and underperforming the broader market over the past year.
The quality grade of "Below Average" accurately captures the company's structural challenges. With a five-year sales CAGR of 40.68% appearing impressive on paper, this growth has failed to translate into acceptable returns on equity, suggesting either poor capital allocation or an unsustainable business model. The average debt-to-equity ratio of 0.36 indicates low leverage, which is positive, but the extremely weak ROE renders this academic.
The valuation assessment of "Very Attractive" appears misleading when considered alongside fundamental weaknesses. Whilst the stock trades at a low P/E and P/BV, these multiples reflect the market's rational assessment of a company with minimal profitability, no dividend, extreme earnings volatility, and promoters actively exiting their positions.
Key Strengths & Risk Factors
✓ KEY STRENGTHS
- Revenue Growth: 57.14% YoY sales increase in Q3 FY26 demonstrates top-line expansion capability
- Zero Long-Term Debt: Clean balance sheet with no long-term borrowings reduces financial risk
- Low Valuation Multiples: P/E of 11.55x and P/BV of 0.45x offer potential upside if fundamentals improve
- RBI Registration: Holds valid NBFC certificate from Reserve Bank of India since March 2016
- Positive YoY Profit: Net profit up 75% year-on-year despite operational challenges
⚠️ KEY CONCERNS
- Promoter Exit: Shareholding collapsed from 0.32% to 0.08% in three quarters—major red flag
- Weak ROE: 3.90% return on equity indicates extremely poor capital efficiency
- Margin Compression: Operating margin plunged from 59.65% to 25.62% quarter-on-quarter
- Earnings Volatility: Quarterly profits range from ₹0.02 Cr to ₹0.65 Cr—highly unpredictable
- Zero Institutional Interest: No FII, MF, or insurance holdings signals lack of confidence
- Micro-Cap Liquidity: ₹28 Cr market cap creates exit difficulties
- Sequential Profit Decline: Net profit down 32.26% QoQ despite revenue growth
Outlook: What to Watch
POSITIVE CATALYSTS
- Stabilisation of operating margins above 40%
- Consistent quarterly profits exceeding ₹0.30 crores
- Promoter shareholding increase or stabilisation
- Entry of institutional investors (FII/MF)
- ROE improvement towards double digits
RED FLAGS
- Further decline in promoter shareholding below 0.05%
- Operating margins falling below 20%
- Quarterly losses or profits below ₹0.10 crores
- Increase in current liabilities beyond ₹35 crores
- Regulatory concerns or RBI certificate issues
The Verdict: Avoid This Value Trap
Score: 37/100
For Fresh Investors: Avoid initiating positions. The combination of promoter exit, weak ROE below 4%, extreme earnings volatility, and zero institutional interest creates an unfavourable risk-reward profile. The low valuation multiples reflect fundamental weaknesses rather than hidden value.
For Existing Holders: Consider exiting positions on any price strength. The sustained decline in promoter shareholding from 0.32% to 0.08% over three quarters represents the most concerning signal, as those with the deepest knowledge of the business are actively reducing their stakes.
Fair Value Estimate: ₹55.00 (15.78% downside from current price of ₹65.30). Given the structural profitability challenges and promoter selling, the stock appears overvalued even at current depressed levels.
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. The views expressed are based on publicly available information and analysis as of the publication date and may change without notice.
