With a market capitalisation of just ₹168.00 crores and classified as a micro-cap stock, Excel Realty operates in the trading and distributors sector. The company's Q2 FY26 results reveal a business model heavily reliant on other income rather than core operations, raising fundamental questions about its long-term viability. The stock has delivered impressive long-term returns—up 680.00% over five years and 125.00% over two years—but recent performance has been dismal, with the stock down 23.53% over the past month and 15.83% year-to-date.
Financial Performance: A Tale of Two Income Streams
Excel Realty's Q2 FY26 financial performance presents a stark dichotomy between operational weakness and other income strength. Net sales in Q2 FY26 collapsed 73.92% quarter-on-quarter to ₹1.51 crores from ₹5.79 crores in Q1 FY26, marking the lowest quarterly revenue in recent periods. Year-on-year, sales declined 63.08% from ₹4.09 crores in Q2 FY25, underscoring persistent revenue generation challenges.
The company's operating profit excluding other income remained deeply negative at ₹-0.67 crores in Q2 FY26, translating to an operating margin of -44.37%. This represents a marginal improvement from Q1 FY26's -21.42% margin but remains far from profitability. The core business continues to burn cash, with operating losses evident across all recent quarters. Employee costs stood at ₹0.42 crores in Q2 FY26, down from ₹0.50 crores in the previous quarter.
The critical factor enabling profitability is other income, which totalled ₹1.80 crores in Q2 FY26, up from ₹1.37 crores in Q1 FY26. This non-operational income stream has consistently exceeded ₹1.20 crores per quarter, effectively subsidising the loss-making core business. When other income is included, operating profit (PBDIT) turned positive at ₹1.13 crores in Q2 FY26, compared to ₹0.13 crores in Q1 FY26. After minimal interest charges of ₹0.03 crores and depreciation of ₹0.04 crores, profit before tax reached ₹1.07 crores. With a tax credit of ₹0.02 crores (negative tax rate of -1.87%), net profit arrived at ₹1.09 crores, yielding the extraordinary PAT margin of 72.19%.
| Quarter | Net Sales (₹ Cr) | Operating Profit Excl OI (₹ Cr) | Other Income (₹ Cr) | Net Profit (₹ Cr) | PAT Margin % |
|---|---|---|---|---|---|
| Sep'25 (Q2 FY26) | 1.51 | -0.67 | 1.80 | 1.09 | 72.19% |
| Jun'25 (Q1 FY26) | 5.79 | -1.24 | 1.37 | 0.02 | 0.35% |
| Mar'25 (Q4 FY25) | 3.95 | -3.12 | 1.30 | -1.91 | -48.35% |
| Dec'24 (Q3 FY25) | 5.10 | -0.30 | 1.32 | 0.96 | 18.82% |
| Sep'24 (Q2 FY25) | 4.09 | -0.33 | 1.30 | 1.10 | 26.89% |
| Jun'24 (Q1 FY25) | 0.49 | -0.51 | 1.29 | 0.55 | 112.24% |
| Mar'24 (Q4 FY24) | 0.58 | -1.00 | 1.20 | 0.17 | 29.31% |
Operational Challenges: Persistent Core Business Weakness
The fundamental issue plaguing Excel Realty is its inability to generate sustainable profits from core trading and distribution operations. The company has recorded negative operating profit (excluding other income) in every quarter over the past two years, with margins ranging from -5.88% to -172.41%. This chronic operational weakness suggests either an unviable business model, intense competitive pressures, or severe execution challenges.
On a nine-month basis for FY26 (April to December 2025), net sales totalled ₹7.30 crores, representing a decline of 24.59% compared to the corresponding period in FY25. This deterioration in top-line performance compounds concerns about the company's market positioning and demand environment. The operating profit to net sales ratio for Q2 FY26 stood at 0.00% when measured on a quarterly basis, marking the lowest level in recent periods.
⚠️ Critical Operational Red Flags
Persistent Operating Losses: The company has failed to achieve positive operating profit (excluding other income) in any quarter over the past two years, with Q2 FY26 recording a -44.37% operating margin. This structural weakness raises serious doubts about the viability of the core business model.
Revenue Volatility: Quarterly sales have fluctuated wildly, ranging from ₹0.49 crores to ₹5.79 crores over the past seven quarters, indicating either an unstable customer base or inconsistent business execution.
Other Income Dependency: The company's profitability is entirely dependent on other income (₹1.80 crores in Q2 FY26), which consistently exceeds operating losses. Without this non-operational income stream, Excel Realty would report continuous losses.
The company's return on equity (ROE) stands at a dismal 0.48% on average and just 0.09% for the latest period, indicating extremely poor capital efficiency. Return on capital employed (ROCE) is negative at -1.80% on average and -3.23% for the latest period, further confirming that the business destroys rather than creates value from its deployed capital. These metrics rank amongst the weakest in the trading and distributors sector and underscore the fundamental quality issues.
Balance Sheet Strength: The Silver Lining
Amidst the operational gloom, Excel Realty's balance sheet provides some measure of comfort. The company maintains a virtually debt-free capital structure, with long-term debt of just ₹0.78 crores as of March 2025 against shareholder funds of ₹173.25 crores. This translates to a net debt to equity ratio of -0.02, meaning the company actually holds more cash than debt—a rare positive in this otherwise concerning picture.
Shareholder funds have remained relatively stable, standing at ₹173.25 crores in March 2025 compared to ₹172.32 crores in March 2024. The company's book value per share is ₹1.23, slightly above the current market price of ₹1.17, suggesting the stock trades marginally below its accounting value. Fixed assets totalled ₹9.32 crores as of March 2025, whilst investments stood at ₹51.82 crores, and current assets at ₹96.91 crores.
Balance Sheet Highlights
Excel Realty operates with minimal debt, maintaining a net cash position that provides financial flexibility. However, this balance sheet strength has not translated into operational performance, with the company failing to deploy its capital productively. The negative ROCE of -3.23% indicates that even with negligible borrowing costs, the business cannot generate adequate returns on its capital base.
Peer Comparison: Lagging Industry Standards
When benchmarked against peers in the trading and distributors sector, Excel Realty's fundamental weakness becomes starkly apparent. The company's ROE of 0.48% trails far behind sector peers, with Northern Spirits achieving 14.95%, MRC Agrotech at 4.17%, and Chandrima Mercantile at 2.53%. Even amongst struggling peers, Excel Realty ranks near the bottom.
| Company | P/E (TTM) | P/BV | ROE % | Debt to Equity | Dividend Yield |
|---|---|---|---|---|---|
| Excel Realty | NA (Loss Making) | 0.94x | 0.48% | -0.02 | NA |
| Northern Spirits | 8.67x | 1.45x | 14.95% | 1.20 | 0.24% |
| Sicagen India | 13.26x | 0.39x | 2.45% | 0.19 | 1.96% |
| Chandrima Mercantile | 44.72x | 1.85x | 2.53% | 0.02 | NA |
| Parshva Enterprises | 615.63x | 10.63x | 1.85% | 0.05 | NA |
| MRC Agrotech | 180.62x | 4.76x | 4.17% | -0.01 | NA |
Excel Realty's price-to-book ratio of 0.94x appears attractive compared to peers like Parshva Enterprises (10.63x) or MRC Agrotech (4.76x), but this discount reflects the market's recognition of the company's poor quality and weak fundamentals. The stock's elevated P/E ratio cannot be meaningfully calculated due to the company's marginal profitability and heavy reliance on other income rather than operational earnings.
Valuation Analysis: Discount Reflects Fundamental Weakness
Excel Realty's current valuation metrics paint a picture of a stock the market views with considerable scepticism. Trading at ₹1.17 per share with a market capitalisation of ₹168.00 crores, the company's price-to-book ratio of 0.94x suggests the stock trades marginally below its accounting book value of ₹1.23 per share. This discount to book value, rather than indicating an attractive entry point, reflects the market's assessment that the company's assets are not generating adequate returns.
The company's overall valuation grade stands at "RISKY" according to proprietary assessment metrics, having been classified as such since April 2023. This risky designation stems from the combination of operating losses, weak profitability metrics, and the unsustainable nature of earnings driven primarily by other income rather than core business operations. The EV/EBITDA multiple of -30.42x and EV/EBIT of -29.17x reflect the negative operating profit situation, whilst the EV/Sales ratio of 9.92x appears elevated given the company's inability to convert sales into operating profit.
The company has not paid dividends since September 2010, with the dividend payout ratio at 0.0%. This absence of shareholder returns, combined with the weak operational performance, offers no income cushion for investors. The stock's 52-week range of ₹0.65 to ₹1.75 shows significant volatility, with the current price sitting 33.14% below the 52-week high and 80.00% above the 52-week low.
Shareholding Pattern: Rising FII Interest Despite Fundamentals
Excel Realty's shareholding structure reveals a company with minimal institutional backing, though recent quarters have seen modest foreign institutional investor (FII) accumulation. Promoter holding has remained stable at 19.12% across the last five quarters, indicating no change in management's stake. The relatively low promoter holding compared to typical Indian companies raises questions about management's confidence in the business, though positively, there is zero promoter pledging.
| Quarter | Promoter % | FII % | Mutual Fund % | Insurance % | Other DII % | Non-Institutional % |
|---|---|---|---|---|---|---|
| Dec'25 | 19.12% | 1.29% | 0.00% | 0.00% | 0.01% | 79.58% |
| Sep'25 | 19.12% | 1.10% | 0.00% | 0.00% | 0.01% | 79.78% |
| Jun'25 | 19.12% | 0.07% | 0.00% | 0.00% | 0.01% | 80.80% |
| Mar'25 | 19.12% | 0.00% | 0.00% | 0.00% | 0.01% | 80.87% |
| Dec'24 | 19.12% | 0.00% | 0.00% | 0.00% | 0.01% | 80.87% |
FII holding has gradually increased from 0.00% in March 2025 to 1.29% in December 2025, with the most significant jump occurring between June and September 2025 (from 0.07% to 1.10%). Whilst this uptick might appear positive, the absolute level of institutional interest remains negligible at just 1.30% total institutional holdings. Mutual funds, insurance companies, and other domestic institutional investors have shown zero interest in the stock, a telling sign of the company's poor quality perception amongst professional investors.
The non-institutional shareholding dominates at 79.58% as of December 2025, typical of micro-cap stocks with limited institutional coverage. This ownership structure contributes to the stock's high volatility and thin trading volumes, with an average daily volume of 7.64 lakh shares.
Stock Performance: Long-Term Gains Overshadowed by Recent Decline
Excel Realty's stock performance presents a striking contrast between impressive long-term returns and dismal recent performance. Over five years, the stock has delivered extraordinary returns of 680.00%, vastly outperforming the Sensex's 78.38% gain and generating a positive alpha of 601.62 percentage points. Similarly, the three-year return of 143.75% and two-year return of 125.00% significantly exceeded benchmark returns, suggesting the stock benefited from either a fundamental turnaround story or speculative interest during earlier periods.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Day | -3.31% | 0.27% | -3.58% |
| 1 Week | -4.10% | 0.31% | -4.41% |
| 1 Month | -23.53% | -2.51% | -21.02% |
| 3 Month | -22.52% | -2.86% | -19.66% |
| 6 Month | -5.65% | 1.51% | -7.16% |
| YTD | -15.83% | -3.11% | -12.72% |
| 1 Year | 37.65% | 7.88% | +29.77% |
| 2 Years | 125.00% | 14.77% | +110.23% |
| 3 Years | 143.75% | 39.16% | +104.59% |
| 5 Years | 680.00% | 78.38% | +601.62% |
However, the recent performance tells a dramatically different story. The stock has declined 23.53% over the past month, 22.52% over three months, and 15.83% year-to-date, significantly underperforming the Sensex across all these shorter timeframes. This recent weakness suggests that whatever factors drove the earlier multi-year rally have dissipated, with the market now focusing on the company's persistent operational challenges and lack of sustainable earnings growth.
From a technical perspective, the stock currently trades in "MILDLY BULLISH" territory according to technical indicators, though this assessment appears at odds with the fundamental deterioration. The stock trades below all key moving averages—5-day (₹1.22), 20-day (₹1.31), 50-day (₹1.35), 100-day (₹1.47), and 200-day (₹1.20)—indicating a clear downtrend. With a beta of 1.50, Excel Realty exhibits significantly higher volatility than the broader market, amplifying both gains and losses.
Investment Thesis: Quality Concerns Override Valuation Discount
Excel Realty's investment thesis fundamentally hinges on whether the company can transform its chronically loss-making operations into a sustainable, profitable business. The current evidence suggests this transformation remains elusive. The company's proprietary Mojo score of 24 out of 100 places it firmly in "STRONG SELL" territory, reflecting the confluence of negative factors: poor quality grade (Below Average), negative financial trend, risky valuation assessment, and weak operational metrics.
The company's quality assessment reveals multiple structural weaknesses: 5-year EBIT growth of -4.39% indicates declining profitability over time, average ROCE of -1.80% and ROE of 0.48% demonstrate abysmal capital efficiency, and the average EBIT to interest coverage of -3.25x highlights the inability to generate positive operating earnings. Whilst the company benefits from a net cash position (net debt to equity of -0.02) and zero promoter pledging, these positives cannot offset the fundamental operational failures.
"A company that consistently destroys value in its core operations, regardless of balance sheet strength, presents an unacceptable risk for long-term investors seeking sustainable wealth creation."
Key Strengths & Risk Factors
✓ Key Strengths
- Debt-Free Balance Sheet: Net cash position with debt-to-equity of -0.02 provides financial flexibility and eliminates solvency concerns
- Stable Other Income: Consistent other income stream of ₹1.20-1.80 crores per quarter provides earnings cushion, though not from core operations
- Zero Promoter Pledging: No pledged shares indicates promoters have not mortgaged their holdings for borrowings
- Long-Term Stock Performance: Five-year return of 680.00% demonstrates significant wealth creation for early investors
- Low Institutional Holding: Minimal institutional ownership (1.30%) leaves room for potential discovery if fundamentals improve
⚠ Key Concerns
- Chronic Operating Losses: Negative operating profit (excluding other income) in every quarter for past two years, with Q2 FY26 margin at -44.37%
- Revenue Instability: Quarterly sales collapsed 73.92% QoQ to ₹1.51 crores in Q2 FY26, showing extreme volatility and lack of business predictability
- Unsustainable Earnings Model: Profitability entirely dependent on other income rather than core trading operations, raising going-concern questions
- Abysmal Capital Efficiency: ROE of 0.48% and ROCE of -1.80% indicate the business destroys shareholder value
- Negative Financial Trend: Short-term financial trend assessed as NEGATIVE, with nine-month sales down 24.59% YoY
- Micro-Cap Liquidity Risk: Market cap of just ₹168 crores with thin trading volumes exposes investors to significant liquidity and volatility risks
- No Dividend Income: Zero dividend payout since 2010 offers no income cushion for investors during price declines
Outlook: What Lies Ahead
Excel Realty stands at a critical juncture where the path forward appears fraught with challenges. The company's ability to stabilise and grow its revenue base whilst simultaneously addressing the chronic operating losses will determine whether the stock can recover from its recent decline or faces further deterioration. Investors should monitor several key indicators to assess whether any meaningful turnaround is materialising.
Positive Catalysts to Watch
- Consistent quarter-on-quarter revenue growth above ₹5 crores demonstrating business stabilisation
- Achievement of positive operating profit (excluding other income) for two consecutive quarters
- Operating margin improvement to at least breakeven (0%) from current -44.37%
- Increased institutional investor participation, particularly from mutual funds or insurance companies
- Management commentary providing clear strategic direction and turnaround roadmap
Red Flags Requiring Exit
- Further quarterly revenue decline below ₹1.50 crores indicating business collapse
- Operating margin deterioration beyond -50%, suggesting accelerating cash burn
- Any reduction or cessation of other income, which currently masks operational failures
- Promoter stake reduction or any pledging of shares
- Continued negative financial trend assessment for more than two consecutive quarters
The nine-month performance for FY26 has already shown troubling trends, with sales of ₹7.30 crores representing a 24.59% decline compared to the prior year period. If this trajectory continues, full-year FY26 revenues could fall below ₹10 crores, making it increasingly difficult for the company to cover fixed costs and justify its current market capitalisation. The dependency on other income to generate reported profits creates a precarious situation where any disruption to this non-operational income stream would immediately expose the underlying business weakness.
The Verdict: Avoid This Value Trap
Score: 24/100
For Fresh Investors: Avoid initiating any position in Excel Realty. The combination of chronic operating losses, extreme revenue volatility, and unsustainable earnings model dependent on other income creates an unacceptable risk-reward profile. The stock's discount to book value is justified by poor fundamentals rather than representing a genuine opportunity.
For Existing Holders: Consider exiting positions, particularly those acquired at higher prices. Whilst the stock has delivered exceptional long-term returns, the recent 23.53% monthly decline and deteriorating operational metrics suggest the multi-year rally has exhausted itself. The negative financial trend and risky valuation assessment indicate further downside risk. Any bounce towards ₹1.30-1.35 levels should be used as an exit opportunity.
Fair Value Estimate: ₹0.75-0.85 (35-42% downside from current price of ₹1.17), based on book value discount appropriate for a chronically loss-making business with negative ROCE and deteriorating trends.
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. Investments in micro-cap stocks carry significant risks including liquidity risk, volatility, and potential loss of capital.
