Beryl Securities Q3 FY26: Strong Revenue Surge Masks Underlying Profitability Concerns

The Indore-based company, primarily engaged in stock broking across capital markets, futures and options, wholesale debt, and currency derivative segments, has delivered a mixed performance that warrants careful scrutiny. While top-line growth appears robust, the sequential volatility in profitability and mounting interest costs present significant concerns for potential investors.

The company's shares have underperformed dramatically, declining 18.36% over the past year whilst the Sensex gained 8.49%—a concerning alpha of -26.85%. More troubling is the three-month decline of 23.44%, which coincides with the stock's shift to a mildly bearish technical trend as of February 3, 2026. Trading below all key moving averages—5-day (₹25.36), 20-day (₹28.28), and 200-day (₹30.23)—the stock faces significant technical headwinds.

Financial Performance: Volatility Beneath the Surface

In Q3 FY26, Beryl Securities reported net sales of ₹1.13 crores, representing a robust 50.67% quarter-on-quarter increase from ₹0.75 crores in Q2 FY26. The year-on-year comparison reveals even more impressive growth of 98.25% over the ₹0.57 crores recorded in Q3 FY25. However, this top-line expansion masks significant operational inconsistencies that demand closer examination.

The company's operating profit (PBDIT excluding other income) surged to ₹0.57 crores in Q3 FY26, yielding a healthy operating margin of 50.44%—a dramatic improvement from the anaemic 8.0% margin recorded in Q2 FY26. This sequential margin expansion of 42.44 percentage points appears impressive on the surface, but the underlying volatility raises questions about the sustainability of this performance. The previous quarter's margin compression to just 8.0% from 41.98% in Q1 FY26 demonstrates the unpredictable nature of the company's operational efficiency.

Net profit for Q3 FY26 stood at ₹0.22 crores, a welcome turnaround from the ₹0.21 crores loss in Q2 FY26. The PAT margin recovered to 19.47% from the negative 28.0% in the preceding quarter. Whilst this recovery is encouraging, the pattern of quarterly losses interspersed with modest profits—including losses in both Q2 FY26 and Q4 FY25—suggests underlying structural challenges rather than a clear path to sustained profitability.

A concerning trend emerges when examining the company's interest burden. Interest costs surged to ₹0.26 crores in Q3 FY26, representing a 30.0% quarter-on-quarter increase from ₹0.20 crores in Q2 FY26. More alarmingly, this represents a dramatic escalation from near-zero interest costs in Q4 FY25 (₹0.05 crores) and negligible amounts in the preceding quarters. This rising interest burden—now consuming 23.01% of operating profit—suggests increasing leverage or higher borrowing costs that could constrain future profitability.

Employee costs have also shown an upward trajectory, remaining flat at ₹0.43 crores for both Q3 FY26 and Q2 FY26, but representing a significant increase from ₹0.36 crores in Q1 FY26 and ₹0.40 crores in Q4 FY25. As the company scales its operations, maintaining control over this fixed cost component will be critical to preserving margins.

Operational Challenges: Weak Return Profile and Structural Concerns

Beryl Securities' long-term return on equity (ROE) of just 2.19% represents a fundamental weakness that cannot be overlooked. This anaemic return on shareholder capital places the company well below acceptable thresholds for value creation in the financial services sector. For context, even modest debt instruments offer returns exceeding this level, raising serious questions about the company's ability to generate adequate returns on invested capital.

The company's return on capital employed (ROCE) of 3.78% similarly disappoints, indicating inefficient utilisation of the capital base. These weak profitability metrics help explain why the company has been classified as a "Below Average" quality company based on long-term financial performance. The combination of low ROE, volatile quarterly results, and mounting interest costs suggests structural challenges rather than temporary headwinds.

The balance sheet reveals shareholder funds of ₹9.72 crores as of March 2024, with minimal fixed assets (₹0.02 crores) and current assets of just ₹1.06 crores. The company operates with a lean asset base, typical of broking operations, but the limited scale raises questions about competitive positioning and the ability to weather industry downturns. With a book value per share of ₹19.24 and shares trading at ₹23.35, the stock commands a price-to-book ratio of 1.14x—a modest premium that seems unjustified given the weak return profile.

Market Context: Underperformance in a Challenging Environment

The broader context for Beryl Securities' performance is decidedly negative. The stock has underperformed its NBFC sector peers by a staggering 39.14 percentage points over the past year, with the sector delivering returns of 20.78% whilst Beryl declined 18.36%. This massive underperformance suggests company-specific issues rather than sector-wide challenges.

The technical picture has deteriorated markedly. The stock shifted to a mildly bearish trend on February 3, 2026, trading at ₹23.35—down 44.25% from its 52-week high of ₹41.88 and just 6.14% above its 52-week low of ₹22.00. All major technical indicators signal weakness: MACD shows bearish signals on both weekly and monthly timeframes, Bollinger Bands indicate bearish momentum, and the stock trades below all key moving averages.

Within its peer group of micro-cap NBFCs, Beryl Securities trades at a P/BV of 1.14x—higher than most comparable companies despite a below-average ROE. Econo Trade India, for instance, delivers a superior ROE of 4.03% whilst trading at just 0.28x book value. This valuation disconnect suggests the market may be overly optimistic about Beryl's prospects relative to its fundamentals.

Valuation Analysis: Expensive Relative to Fundamentals

The valuation assessment for Beryl Securities presents a concerning picture. The company is currently classified as "Very Expensive" based on proprietary valuation metrics, with the stock having oscillated between "Expensive" and "Very Expensive" grades throughout late 2025. This valuation grade appears justified when considering the company's weak return profile and volatile earnings trajectory.

With an EV/EBITDA multiple of 15.18x and EV/Sales of 5.58x, the company trades at premium valuations despite its micro-cap status and operational challenges. The absence of a meaningful P/E ratio (due to loss-making quarters) further complicates traditional valuation analysis, but the price-to-book ratio of 1.14x appears elevated for a company generating ROE of just 2.19%—well below the cost of equity for such a high-risk, illiquid micro-cap stock.

The proprietary Mojo Score of just 26 out of 100 places Beryl Securities firmly in "Strong Sell" territory, with the score having consistently remained in the 21-44 range throughout 2025. This low score reflects the confluence of negative factors: bearish technical trend, flat financial performance, weak long-term fundamentals with ROE of 2.19%, and significant underperformance versus the broader market.

Shareholding Pattern: Stable Promoter Base, Zero Institutional Interest

The shareholding pattern reveals a stable promoter holding of 60.59% as of December 2025, unchanged for three consecutive quarters after a marginal increase of 0.81 percentage points in March 2025. Key promoters include Vineet Bajpai (29.48%), Sanyam Jain (15.15%), and Agam Gupta (15.15%), with Rani Sulochana Bajpai holding a minor 0.81% stake. Importantly, there is no promoter pledging, which removes one potential risk factor.

However, the complete absence of institutional participation—zero holdings from FIIs, mutual funds, insurance companies, and other domestic institutional investors—represents a significant red flag. This institutional vacuum suggests sophisticated investors have found little merit in the company's investment case, likely due to the combination of micro-cap illiquidity, weak fundamentals, and volatile earnings profile. The 39.41% non-institutional holding has also remained static, indicating limited retail interest as well.

Stock Performance: Consistent Underperformance Across Timeframes

The stock's performance metrics paint a uniformly negative picture across virtually all timeframes. Over the past year, Beryl Securities has declined 18.36% whilst the Sensex gained 8.49%, resulting in negative alpha of -26.85 percentage points. This underperformance extends to shorter timeframes: one-month returns of -16.49% (versus Sensex -2.36%), three-month returns of -23.44% (versus Sensex -0.29%), and six-month returns of -20.44% (versus Sensex +3.89%).

The only bright spot emerges in the three-year timeframe, where the stock has delivered returns of 103.04% versus the Sensex's 37.63%—positive alpha of 65.41 percentage points. However, this longer-term outperformance appears to have reversed decisively, with consistent underperformance across all shorter timeframes suggesting a structural deterioration in the investment case.

The stock's beta of 1.50 indicates high volatility relative to the broader market, with annualised volatility of 67.29%—nearly six times the Sensex's 11.41% volatility. This extreme volatility, combined with negative returns, places the stock firmly in the "High Risk Low Return" category. The negative Sharpe ratio confirms that investors are not being compensated for the substantial risks undertaken.

Investment Thesis: Multiple Red Flags Outweigh Growth Narrative

The investment thesis for Beryl Securities is undermined by multiple structural weaknesses that outweigh the superficial appeal of strong revenue growth. The company's Mojo assessment reveals a "Mixed" overall picture with concerning underlying fundamentals:

Near-term drivers present a mixed picture: whilst the quarterly financial trend is classified as "Flat" (recovering from previous quarter's loss but lacking sustained momentum), the technical indicators remain mildly bearish. The quality assessment of "Below Average" reflects the company's weak long-term financial performance, with ROE of 2.19% placing it well below acceptable standards for value creation.

Outlook: What to Watch for Potential Reversal

For investors monitoring Beryl Securities, several key indicators will determine whether the company can reverse its current trajectory or whether the structural challenges prove insurmountable. The company requires sustained operational improvements across multiple dimensions to merit reconsideration.