The quarter's performance reflects persistent challenges in the brokerage industry, with net sales declining to ₹6.61 crores—the lowest quarterly revenue in recent periods—down 17.48% quarter-on-quarter and 27.76% year-on-year. Despite these headwinds, the company managed to maintain operating margins above 27%, demonstrating some resilience in cost management even as trading volumes remain subdued across the industry.
The brokerage firm's performance over the past year has been challenging, with the stock delivering a negative return of 42.43% compared to the Sensex's positive return of 6.56%, resulting in a substantial alpha of -48.99 percentage points. This underperformance reflects both company-specific challenges and broader sectoral headwinds, as the capital markets segment has itself delivered only 17.99% returns over the same period.
Quarterly Trend: Revenue Pressure Intensifies
| Quarter | Net Sales (₹ Cr) | QoQ Change | Net Profit (₹ Cr) | QoQ Change | PAT Margin |
|---|---|---|---|---|---|
| Dec'25 (Q3) | 6.61 | -17.48% | 0.89 | -9.18% | 13.46% |
| Sep'25 (Q2) | 8.01 | +15.09% | 0.98 | -2.97% | 12.23% |
| Jun'25 (Q1) | 6.96 | -10.54% | 1.01 | -24.63% | 14.51% |
| Mar'25 (Q4) | 7.78 | -14.97% | 1.34 | +30.10% | 17.22% |
| Dec'24 (Q3) | 9.15 | -26.03% | 1.03 | -28.97% | 11.26% |
| Sep'24 (Q2) | 12.37 | -3.06% | 1.45 | -26.02% | 11.72% |
| Jun'24 (Q1) | 12.76 | — | 1.96 | — | 15.36% |
The quarterly trend table reveals a concerning pattern of revenue volatility and declining profitability. From a peak of ₹12.76 crores in June 2024, net sales have contracted by 48.20% to reach ₹6.61 crores in the latest quarter. Similarly, net profit has declined from ₹1.96 crores to ₹0.89 crores over the same period, representing a 54.59% erosion in absolute profitability.
Financial Performance: Margin Resilience Amidst Revenue Decline
In Q3 FY26, DB (International) Stock Brokers reported net sales of ₹6.61 crores, down 17.48% sequentially from ₹8.01 crores in Q2 FY26 and down 27.76% year-on-year from ₹9.15 crores in Q3 FY25. This represents the lowest quarterly revenue in recent periods, reflecting subdued trading activity and reduced brokerage volumes across retail and institutional segments.
Despite the revenue pressure, the company demonstrated commendable cost discipline. Operating profit (PBDIT excluding other income) stood at ₹1.80 crores with an operating margin of 27.23%, expanding by 960 basis points year-on-year from 17.60% in Q3 FY25. This margin improvement occurred despite lower revenue, suggesting effective cost rationalisation measures. Employee costs were maintained at ₹1.69 crores, flat sequentially and down marginally from ₹1.84 crores in the year-ago quarter.
Interest costs declined to ₹0.34 crores from ₹0.36 crores year-on-year, whilst depreciation remained stable at ₹0.30 crores. Profit before tax came in at ₹1.16 crores, down 18.97% year-on-year, with a tax rate of 23.28%. The PAT margin improved to 13.46% from 11.26% in Q3 FY25, though this partially reflects the lower revenue base effect.
On a nine-month basis for FY26 (April-December 2025), the company reported cumulative net sales of ₹21.58 crores and net profit of ₹2.88 crores, representing year-on-year declines of 35.14% in profitability. The full-year FY25 had seen net sales of ₹42.00 crores with a net profit of ₹5.00 crores, setting a challenging comparative base.
Balance Sheet Quality: Adequate Capital but Working Capital Strain
DB (International) Stock Brokers maintains a debt-free balance sheet with zero long-term borrowings as of March 2025. Shareholder funds stood at ₹72.02 crores, comprising share capital of ₹7.00 crores and reserves of ₹65.02 crores. The book value per share was ₹20.58, compared to the current market price of ₹24.80, implying a price-to-book ratio of 1.17 times.
However, working capital management has shown signs of strain. Trade payables declined substantially to ₹35.25 crores in March 2025 from ₹57.38 crores in March 2024, whilst current assets decreased to ₹103.46 crores from ₹121.65 crores. Cash flow from operations turned negative at zero in FY25 compared to negative ₹5.00 crores in FY24, primarily due to adverse working capital changes of ₹6.00 crores. Closing cash stood at ₹5.00 crores as of March 2025, down from ₹8.00 crores in the previous year.
⚠️ Working Capital Concerns
The company experienced negative cash flow from operations in FY25, with working capital changes absorbing ₹6.00 crores. Current assets declined by ₹18.19 crores year-on-year, whilst trade payables fell by ₹22.13 crores, indicating potential liquidity pressures in the brokerage operations. Investors should monitor cash generation closely in coming quarters.
Profitability Metrics: ROE Deteriorates to Single Digits
Return on Equity (ROE), a critical measure of capital efficiency, has weakened significantly for DB (International) Stock Brokers. The latest ROE stood at just 5.88%, substantially below the average ROE of 9.89% over recent years. This deterioration reflects the compressed profitability and indicates that the company is generating less than ₹6 of profit for every ₹100 of shareholder capital employed—a concerning trend for equity investors seeking adequate returns.
The company's ROCE (Return on Capital Employed) presents an even more troubling picture at -37.31%, indicating that the business is destroying value on an operating basis. This negative ROCE suggests that the earnings before interest and tax are insufficient relative to the capital deployed in the business, raising questions about the sustainability of current operations and the need for strategic repositioning.
Capital Efficiency Under Pressure
With ROE at 5.88% and ROCE at -37.31%, DB (International) Stock Brokers is significantly underperforming on capital efficiency metrics. For context, a healthy brokerage firm typically generates ROE in the range of 15-25%. The current single-digit ROE suggests that shareholders are earning returns well below the cost of equity, making the stock less attractive from a fundamental value creation perspective.
Peer Comparison: Valuation Discount Reflects Challenges
| Company | P/E (TTM) | P/BV | ROE (%) | Debt/Equity | Market Cap |
|---|---|---|---|---|---|
| DB Intl. Stock | 19.91x | 1.17x | 9.89% | 0.04 | ₹88 Cr |
| Dharni Capital | 38.72x | 5.75x | 15.82% | 0.04 | — |
| LKP Securities | 9.82x | 1.17x | 11.96% | 0.85 | — |
| Inventure Growth | 29.43x | 0.41x | 4.98% | 0.10 | — |
| Asit C Mehta Fin | NA (Loss Making) | 4.48x | 3.21% | 2.92 | — |
| Wallfort Financial | NA (Loss Making) | 0.46x | 13.18% | 0.00 | — |
Compared to its capital markets peers, DB (International) Stock Brokers trades at a P/E ratio of 19.91 times, which appears reasonable relative to the sector average of approximately 26 times (excluding loss-making entities). However, the company's ROE of 9.89% lags behind peers like Dharni Capital (15.82%) and LKP Securities (11.96%), justifying a valuation discount.
The price-to-book ratio of 1.17 times is modest and in line with LKP Securities, but significantly below Dharni Capital's 5.75 times. This valuation differential reflects the market's assessment of earnings quality and growth prospects. DB (International) Stock Brokers' debt-free status (debt-to-equity of 0.04) is a positive, matching Dharni Capital's conservative leverage profile.
Valuation Analysis: Attractive Entry Point or Value Trap?
At the current market price of ₹24.80, DB (International) Stock Brokers trades at a P/E ratio of 19.91 times trailing twelve-month earnings and a price-to-book ratio of 1.17 times. The stock's valuation grade stands at "Attractive," having oscillated between "Attractive" and "Very Attractive" over recent months, most recently changing to Attractive from Very Attractive on October 7, 2025.
However, the negative EV/EBITDA of -0.57 times and EV/EBIT of -0.70 times present an unusual situation, likely reflecting the company's cash position exceeding its enterprise value—a scenario that can occur in micro-cap stocks with limited institutional interest. The EV/Sales ratio of -0.14 times further underscores this dynamic.
The stock is currently trading just 5.00% above its 52-week low of ₹23.62 and 43.64% below its 52-week high of ₹44.00, suggesting significant downside has already been priced in. However, the absence of dividend payments (last dividend paid in September 2013) and zero institutional holdings raise questions about the company's attractiveness to sophisticated investors.
"Whilst the valuation appears optically cheap, deteriorating fundamentals, negative cash flows, and complete absence of institutional interest suggest investors should demand a significant margin of safety before considering entry."
Shareholding Pattern: Promoter Stability Amidst Retail Flux
| Category | Dec'25 | Sep'25 | Jun'25 | Mar'25 | QoQ Change |
|---|---|---|---|---|---|
| Promoter | 41.17% | 41.17% | 41.17% | 41.66% | Flat |
| FII | 0.00% | 0.00% | 0.00% | 0.00% | — |
| Mutual Funds | 0.00% | 0.00% | 0.00% | 0.00% | — |
| Insurance | 0.00% | 0.00% | 0.00% | 0.00% | — |
| Non-Institutional | 58.83% | 58.83% | 58.83% | 58.33% | Flat |
The shareholding pattern reveals a stable promoter holding of 41.17% over the past three quarters, down marginally from 41.66% in March 2025. The reduction of 49 basis points in Q1 FY26 appears to be a one-time adjustment, with holdings remaining unchanged thereafter. Promoters have not pledged any shares, which is a positive indicator of their confidence in the business.
However, the complete absence of institutional investors—zero FII, mutual fund, insurance, and other DII holdings—is a significant red flag. The lack of institutional interest suggests limited research coverage, poor liquidity, and concerns about corporate governance or business sustainability. The non-institutional (retail) holding of 58.83% indicates this is primarily a retail-driven stock, which can lead to higher volatility and limited price discovery.
Stock Performance: Severe Underperformance Across All Timeframes
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | -3.16% | -2.43% | -0.73% |
| 1 Month | +1.35% | -4.66% | +6.01% |
| 3 Months | -2.75% | -3.57% | +0.82% |
| 6 Months | -12.95% | -1.44% | -11.51% |
| YTD | -0.96% | -4.32% | +3.36% |
| 1 Year | -42.43% | +6.56% | -48.99% |
| 2 Years | -40.23% | +15.87% | -56.10% |
| 3 Years | +3.98% | +33.80% | -29.82% |
DB (International) Stock Brokers has delivered deeply disappointing returns across most timeframes. The one-year return of -42.43% compares unfavourably to the Sensex's +6.56% return, resulting in a substantial negative alpha of -48.99 percentage points. The stock has also underperformed the capital markets sector, which returned +17.99% over the same period, by a massive 60.42 percentage points.
Over two years, the stock has declined 40.23% whilst the Sensex gained 15.87%, and even the three-year return of +3.98% significantly trails the Sensex's +33.80% gain. The only bright spot is the five-year return of +146.28%, which outperformed the Sensex's +66.82% by 79.46 percentage points, though this largely reflects the recovery from extremely depressed levels during the pandemic period.
The stock's beta of 1.50 indicates high volatility—it tends to move 50% more than the broader market. With a volatility of 28.52% and negative risk-adjusted returns of -1.49 over the past year, the stock falls into the "Medium Risk Low Return" category—an unfavourable combination for risk-conscious investors.
Technical Analysis: Mildly Bearish Trend with Limited Support
From a technical perspective, DB (International) Stock Brokers is currently in a "Mildly Bearish" trend, having changed from "Bearish" on January 20, 2026. The stock is trading below all key moving averages—5-day (₹25.01), 20-day (₹24.96), 50-day (₹25.05), 100-day (₹25.37), and 200-day (₹26.96)—indicating persistent downward pressure.
The immediate support level is at ₹23.62, representing the 52-week low, whilst immediate resistance sits at ₹24.96 (20-day moving average area). Major resistance is at ₹25.37 (100-day moving average), with strong resistance at ₹26.96 (200-day moving average). The 52-week high of ₹44.00 represents a distant resistance level, 77.42% above current prices.
Technical indicators present a mixed picture. MACD shows "Mildly Bullish" on the weekly chart but "Bearish" on the monthly chart. Bollinger Bands are "Bearish" on both weekly and monthly timeframes, suggesting the stock is trading in the lower band with downward momentum. The On-Balance Volume (OBV) indicator shows "Mildly Bullish" on the weekly chart, indicating some accumulation, though this is contradicted by bearish price action.
Investment Thesis: Quality Concerns Outweigh Valuation Appeal
DB (International) Stock Brokers presents a classic value trap scenario. Whilst the valuation appears attractive at 19.91 times earnings and 1.17 times book value, the underlying business quality is concerning. The company's "Below Average" quality grade reflects weak long-term financial performance, with an average ROE of just 9.89%—well below the threshold for quality compounders in the financial services sector.
The negative financial trend in Q3 FY26, marked by the lowest quarterly net sales (₹6.61 crores) and declining nine-month profitability (-35.14% YoY), suggests the business is struggling to adapt to changing market dynamics. The mildly bearish technical trend and severe underperformance versus both the Sensex and the capital markets sector over the past year further reinforce the cautious outlook.
Key Strengths & Risk Factors
✓ KEY STRENGTHS
- Debt-Free Balance Sheet: Zero long-term debt provides financial flexibility and reduces solvency risk during challenging periods.
- Improved Operating Margins: Operating margin expanded to 27.23% in Q3 FY26 from 17.60% in Q3 FY25, demonstrating effective cost management.
- Stable Promoter Holding: Promoters maintain 41.17% stake with zero pledging, indicating confidence in long-term prospects.
- Attractive Valuation: Trading at P/E of 19.91x and P/BV of 1.17x, below sector averages, offering potential value for patient investors.
- Long-Term Growth Track Record: Five-year sales CAGR of 20.86% demonstrates historical ability to grow the business.
⚠ KEY CONCERNS
- Severe Revenue Decline: Net sales down 27.76% YoY to ₹6.61 crores in Q3 FY26, the lowest quarterly revenue in recent periods.
- Weak Capital Efficiency: ROE of just 5.88% and negative ROCE of -37.31% indicate poor returns on invested capital.
- Zero Institutional Interest: Complete absence of FII, mutual fund, and insurance holdings raises governance and liquidity concerns.
- Negative Cash Flow: Operating cash flow turned negative in FY25 with adverse working capital changes of ₹6.00 crores.
- Severe Stock Underperformance: One-year return of -42.43% versus Sensex +6.56%, with negative alpha of -48.99 percentage points.
- No Dividend Policy: Last dividend paid in September 2013, indicating limited shareholder returns through distributions.
- High Volatility: Beta of 1.50 and volatility of 28.52% create significant downside risk in market corrections.
Outlook: What to Watch in Coming Quarters
📈 POSITIVE CATALYSTS
- Market Recovery: Improvement in retail trading volumes and market participation could boost brokerage revenues.
- Cost Optimisation: Further operating leverage from fixed cost base if revenues stabilise or recover.
- Working Capital Improvement: Reduction in trade payables and better cash conversion could strengthen liquidity position.
- Technical Bounce: Stock trading near 52-week low (₹23.62) offers potential for mean reversion if fundamentals stabilise.
🚨 RED FLAGS TO MONITOR
- Further Revenue Decline: If Q4 FY26 sales fall below ₹6.00 crores, it would signal accelerating business deterioration.
- Cash Burn: Continued negative operating cash flow could deplete the ₹5.00 crore cash balance within 2-3 quarters.
- Promoter Stake Reduction: Any further decline in promoter holding below 41% would be a major negative signal.
- Margin Compression: If operating margins fall below 20% despite cost controls, it would indicate structural profitability challenges.
- Breach of 52-Week Low: A decisive break below ₹23.62 could trigger further technical selling pressure.
The Verdict: Strong Sell – Exit Recommended
Score: 20/100
For Fresh Investors: Avoid initiating positions. The combination of deteriorating fundamentals (revenue down 27.76% YoY, ROE at 5.88%, negative ROCE), negative financial trend, zero institutional interest, and severe stock underperformance (-42.43% in one year) presents an unfavourable risk-reward profile. The attractive valuation is likely a value trap rather than a genuine opportunity.
For Existing Holders: Consider exiting positions at current levels or on any technical bounce towards ₹26-27. The business is showing clear signs of structural challenges with lowest-ever quarterly revenues, negative cash flows, and no visible catalysts for turnaround. The absence of institutional investors and lack of dividend payments further reduce the investment case. Redeploy capital to higher-quality opportunities with better growth visibility.
Fair Value Estimate: ₹18.00-20.00 (19-27% downside risk from current price of ₹24.80), based on normalized earnings of ₹0.90-1.00 per share and a justified P/E multiple of 15-18x given the below-average quality profile and negative growth trajectory.
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. The views expressed are based on data available as of January 23, 2026, and are subject to change.
