The stock has been in freefall, trading at ₹72.60 as of February 11, 2026, down 51.60% over the past year and 55.73% below its 52-week high of ₹164.00. The quarter's results have reinforced bearish sentiment, with technical indicators uniformly negative and the company's proprietary advisory rating firmly at "STRONG SELL" with a dismal score of 20/100.
The quarter's performance represents a continuation of deteriorating trends that have plagued this micro-cap entity. With revenues barely registering at meaningful levels and profitability evaporating, First Custodian Fund faces existential questions about its business model and operational viability in an increasingly competitive financial services landscape.
| Quarter | Net Sales (₹ Cr) | QoQ Change | YoY Change | Net Profit (₹ Cr) | QoQ Change | YoY Change | PAT Margin % |
|---|---|---|---|---|---|---|---|
| Sep'25 | 0.01 | 0.00% | -75.00% | 0.02 | +109.52% | -95.83% | 200.0% |
| Jun'25 | 0.01 | -50.00% | -66.67% | -0.21 | -2,200.00% | -131.82% | -2,100.0% |
| Mar'25 | 0.02 | 0.00% | -33.33% | 0.01 | -98.33% | -98.67% | 50.0% |
| Dec'24 | 0.02 | -50.00% | — | 0.60 | +22.45% | — | 3,000.0% |
| Sep'24 | 0.04 | +33.33% | — | 0.49 | -25.76% | — | 1,225.0% |
| Jun'24 | 0.03 | 0.00% | — | 0.66 | -12.00% | — | 2,200.0% |
| Mar'24 | 0.03 | — | — | 0.75 | — | — | 2,500.0% |
Financial Performance: Revenue Collapse Drives Profitability Crisis
The Q2 FY2026 results paint a grim picture of a company in severe operational distress. Net sales of ₹0.01 crores remained flat on a quarter-on-quarter basis but represented a devastating 75.00% decline year-on-year from ₹0.04 crores in Q2 FY2025. This revenue implosion reflects the fundamental challenges facing First Custodian Fund's brokerage and securities dealing operations, with minimal transaction volumes and virtually non-existent business activity.
Net profit for Q2 FY2026 stood at just ₹0.02 crores, recovering from a loss of ₹0.21 crores in Q1 FY2026 but collapsing 95.83% year-on-year from ₹0.49 crores. The PAT margin of 200.0%, whilst appearing elevated, is misleading given the minuscule absolute revenue base—it simply reflects that other income and operational adjustments are propping up profitability in the absence of meaningful business revenues. The margin compression from 1,225.0% in Q2 FY2025 to 200.0% in Q2 FY2026 underscores the deterioration in earnings quality.
Operating profit (PBDIT) excluding other income turned marginally positive at ₹0.05 crores in Q2 FY2026, recovering from a negative ₹0.17 crores in Q1 FY2026, but remaining 92.54% below the ₹0.67 crores achieved in Q2 FY2025. The company's operating margin (excluding other income) stood at 500.0% in Q2 FY2026, a misleading metric given the negligible revenue base. Employee costs of ₹0.05 crores remained stable but consume five times the quarterly revenue, highlighting severe operational inefficiency.
Operational Challenges: Business Model Under Severe Strain
First Custodian Fund's operational metrics reveal a company struggling to generate meaningful business activity. The collapse in net sales to just ₹0.01 crores per quarter—effectively ₹1 lakh in absolute terms—indicates that the company's brokerage services and securities dealing operations have virtually ground to a halt. With the company being a member of the National Stock Exchange and providing brokerage services, such minimal transaction volumes raise serious questions about client engagement, market positioning, and competitive relevance.
The company's balance sheet as of March 2025 showed shareholder funds of ₹15.50 crores, comprising share capital of ₹1.50 crores and reserves of ₹14.00 crores. With zero long-term debt, the company maintains a debt-free status, which is a positive aspect. Current assets stood at ₹15.36 crores against current liabilities of ₹1.04 crores, providing adequate liquidity. However, with fixed assets of just ₹0.35 crores and no investments on the books, the company appears to have minimal operational infrastructure or strategic investments to drive future growth.
The average return on equity of 7.78% over the long term is weak for a financial services company, reflecting poor capital efficiency. The latest ROE of 2.74% has deteriorated further, indicating that the company is generating minimal returns on shareholder capital. With negative capital employed, the ROCE metric is not calculable, further highlighting the operational challenges. The book value per share of ₹103.34 stands significantly above the current market price of ₹72.60, suggesting the market has little confidence in the company's ability to generate future earnings.
Critical Operational Concerns
Revenue Crisis: Net sales of ₹0.01 crores per quarter represent virtually non-existent business activity, with revenues collapsing 75.00% year-on-year. The brokerage and securities dealing business has failed to generate meaningful transaction volumes.
Profitability Collapse: Net profit of ₹0.02 crores in Q2 FY2026 marks a 95.83% YoY decline, with margins misleadingly high due to negligible revenue base. The company is surviving on cost containment rather than business growth.
Weak Capital Efficiency: Average ROE of 7.78% and latest ROE of 2.74% reflect poor returns on shareholder capital, with the company unable to deploy its ₹15.50 crores of shareholder funds productively.
Industry Context: Struggling in a Competitive Brokerage Landscape
First Custodian Fund operates in the highly competitive NBFC and brokerage services sector, where scale, technology, and client relationships are critical success factors. The company's inability to generate meaningful revenues suggests it has been marginalised by larger, better-capitalised competitors offering superior platforms, lower costs, and broader product offerings. The rise of discount brokers and digital platforms has fundamentally disrupted traditional brokerage models, leaving small players like First Custodian Fund struggling for relevance.
The company's business model—deriving income from the sale of securities in the secondary market and providing brokerage services—requires active client engagement and transaction volumes. The collapse in net sales to ₹0.01 crores per quarter indicates a near-total loss of client activity, whether due to client attrition, lack of competitive offerings, or failure to adapt to changing market dynamics. Without a clear strategy to revitalise its brokerage operations or pivot to new revenue streams, the company faces an uncertain future.
Market Positioning: Lost Ground in Brokerage Services
With net sales of just ₹0.01 crores per quarter, First Custodian Fund has effectively lost its position in the brokerage services market. The company's NSE membership provides access to trading infrastructure, but without clients, technology investments, or competitive pricing, it has been unable to compete with modern discount brokers and full-service firms. The micro-cap status (₹12.00 crores market cap) reflects investor scepticism about the company's ability to turn around its fortunes.
Peer Comparison: Underperforming Across Key Metrics
Comparing First Custodian Fund to its NBFC peers reveals relative positioning challenges. Whilst the company maintains a reasonable P/E ratio of 25.93x compared to peers like Goenka Business (29.00x), this reflects low absolute earnings rather than attractive valuation. The company's price-to-book ratio of 0.71x suggests the stock trades below book value, indicating market concerns about asset quality and future earnings potential.
First Custodian Fund's average ROE of 7.78% is higher than most peers in the comparison set, but this is a low bar given that several peers show negligible or zero ROE. The company's debt-free status (debt-to-equity of 0.00) is a positive differentiator, but without meaningful business activity, this financial conservatism offers little strategic advantage. The dividend yield of 1.38% provides some income support, but with a latest dividend of just ₹1 per share paid in September 2025, this is unlikely to attract yield-seeking investors.
| Company | P/E (TTM) | P/BV | ROE (%) | Debt/Equity | Div Yield (%) |
|---|---|---|---|---|---|
| First Custodian Fund | 25.93 | 0.71 | 7.78 | 0.00 | 1.38 |
| Ushakiran Finance | NA (Loss Making) | 0.75 | 0.0 | 0.00 | — |
| Indergiri Finance | NA (Loss Making) | 11.67 | 0.0 | 0.00 | — |
| Goenka Business | 29.00 | 0.45 | 3.61 | 0.00 | — |
| Munoth Financial Services | NA (Loss Making) | 1.31 | 0.0 | 0.05 | — |
| India Lease Development | NA (Loss Making) | 1.19 | 0.0 | 0.00 | — |
First Custodian Fund ranks fifth by market capitalisation amongst this peer group at ₹12.00 crores, reflecting its micro-cap status. Whilst the company's ROE of 7.78% is superior to most peers, the absolute level remains weak for a financial services company. The trading below book value (P/BV of 0.71x) suggests investors assign little value to the company's future earnings potential, viewing the shareholder funds as worth more in liquidation than as a going concern.
Valuation Analysis: Trading Below Book Value Reflects Deep Concerns
First Custodian Fund's valuation metrics reflect market scepticism about the company's future prospects. The P/E ratio of 25.93x, whilst appearing moderate, is based on minimal absolute earnings of approximately ₹0.46 crores on a trailing twelve-month basis. The price-to-book ratio of 0.71x indicates the stock trades at a 29% discount to book value of ₹103.34 per share, suggesting investors believe the company's assets are worth more than its ongoing business operations.
The company's valuation grade has fluctuated between "Attractive" and "Fair" in recent months, currently standing at "Attractive" as of November 2025. However, this attractiveness is relative and reflects the deep discount to book value rather than compelling business fundamentals or growth prospects. With negative EV/EBITDA, EV/EBIT, and EV/Sales multiples, traditional valuation frameworks break down, further highlighting the operational challenges.
The dividend yield of 1.38% provides some support, but with a latest dividend of just ₹1 per share (ex-date September 18, 2025), this represents a minimal absolute return. The 52-week price range of ₹65.00 to ₹164.00 shows extreme volatility, with the current price of ₹72.60 sitting just 11.69% above the 52-week low and 55.73% below the 52-week high. This price action reflects the market's loss of confidence in the company's ability to revive its business operations.
Shareholding: Stable Promoter Base, Zero Institutional Interest
The shareholding pattern of First Custodian Fund has remained remarkably stable over the past five quarters, with promoter holding steady at 52.57% and non-institutional investors holding the remaining 47.43%. There has been zero participation from foreign institutional investors, mutual funds, insurance companies, or other domestic institutional investors across all reported quarters, reflecting the company's micro-cap status and lack of institutional appeal.
The promoter group, led by Sangharsh Finvest Pvt Ltd (24.98%), Vimala Mantri (4.97%), Sushil Kumar Mantri (4.97%), and Surendra Kumar Banthia (4.97%), has maintained consistent holdings with no sequential changes. Importantly, there is no promoter pledging, indicating the promoter group is not facing financial distress requiring them to pledge shares for borrowings. However, the lack of promoter buying or institutional interest suggests limited confidence in near-term business prospects.
| Quarter | Promoter % | QoQ Change | FII % | MF % | Insurance % | Non-Inst % |
|---|---|---|---|---|---|---|
| Dec'25 | 52.57 | 0.00 | 0.00 | 0.00 | 0.00 | 47.43 |
| Sep'25 | 52.57 | 0.00 | 0.00 | 0.00 | 0.00 | 47.43 |
| Jun'25 | 52.57 | 0.00 | 0.00 | 0.00 | 0.00 | 47.43 |
| Mar'25 | 52.57 | 0.00 | 0.00 | 0.00 | 0.00 | 47.43 |
| Dec'24 | 52.57 | — | 0.00 | 0.00 | 0.00 | 47.43 |
The complete absence of institutional investors—zero FII, mutual fund, insurance, or other DII holdings—is a significant red flag. Institutional investors typically conduct rigorous due diligence and provide validation of business models and management quality. Their total absence from First Custodian Fund's shareholder base suggests the company does not meet institutional investment criteria, whether due to size, liquidity, governance concerns, or business model viability. For retail investors, this lack of institutional participation should serve as a cautionary signal.
Stock Performance: Severe Underperformance Across All Timeframes
First Custodian Fund's stock performance has been dismal across most relevant timeframes, with the stock severely underperforming the broader market. Over the past year, the stock has collapsed 51.60% whilst the Sensex gained 10.41%, resulting in a negative alpha of 62.01 percentage points. This underperformance reflects investor disappointment with the company's deteriorating financial performance and lack of business momentum.
In the shorter term, the stock has declined 8.56% over the past week, 5.69% over one month, 19.78% over three months, and 28.05% over six months, consistently underperforming the Sensex across all these periods. Year-to-date, the stock is down 18.43% compared to the Sensex's decline of 1.16%, representing 17.27 percentage points of underperformance. The stock's volatility of 67.40% is extremely high, with a beta of 1.50, indicating it is significantly more volatile than the broader market.
| Period | Stock Return (%) | Sensex Return (%) | Alpha (pp) |
|---|---|---|---|
| 1 Day | +0.50 | -0.05 | +0.55 |
| 1 Week | -8.56 | +0.50 | -9.06 |
| 1 Month | -5.69 | +0.79 | -6.48 |
| 3 Months | -19.78 | +0.43 | -20.21 |
| 6 Months | -28.05 | +4.50 | -32.55 |
| YTD | -18.43 | -1.16 | -17.27 |
| 1 Year | -51.60 | +10.41 | -62.01 |
| 2 Years | +31.98 | +17.65 | +14.33 |
| 3 Years | +95.95 | +38.81 | +57.14 |
| 5 Years | +217.72 | +63.46 | +154.26 |
On a longer-term basis, the stock has delivered positive returns over two, three, and five-year periods, with particularly strong five-year returns of 217.72% (alpha of +154.26 percentage points). However, this historical outperformance appears to have reversed sharply, with the recent collapse in business fundamentals driving severe underperformance. The stock's risk-adjusted return of -0.77 over the past year, combined with its high volatility, places it in the "HIGH RISK LOW RETURN" category—an unattractive risk-reward profile for investors.
Technical indicators uniformly point to bearish sentiment, with the stock in a "BEARISH" trend since January 19, 2026. The stock trades below all key moving averages—5-day (₹77.61), 20-day (₹77.03), 50-day (₹81.75), 100-day (₹85.87), and 200-day (₹97.77)—indicating sustained downward momentum. MACD, RSI, Bollinger Bands, and KST indicators all flash bearish or mildly bearish signals, with no positive technical catalysts visible in the near term.
Investment Thesis: Multiple Red Flags Across All Parameters
First Custodian Fund's investment thesis is severely compromised across all critical parameters. The company's overall proprietary score of 20/100 places it firmly in "STRONG SELL" territory, with the recommendation being to "strongly consider selling" or "exit recommended." This dismal score reflects fundamental weaknesses across valuation, quality, financial trends, and technical indicators.
The quality assessment grades the company as "BELOW AVERAGE," noting it is a "below average quality company basis long term financial performance." Whilst the company has achieved reasonable long-term sales growth of 18.53% and EBIT growth of 12.60%, the average ROE of 7.78% is weak, and the latest ROE of 2.74% has deteriorated further. The complete absence of institutional holdings (0.0%) reflects lack of institutional validation of the business model.
The financial trend is classified as "FLAT" for the latest quarter (Dec'25), with no key negative triggers identified but also no positive momentum. The technical trend is firmly "BEARISH," with the stock having changed to bearish on January 19, 2026, and remaining below all major moving averages. The valuation grade of "ATTRACTIVE" reflects the deep discount to book value but does not compensate for the fundamental business challenges.
Key Strengths & Risk Factors
Key Strengths
- Debt-Free Balance Sheet: Zero long-term debt provides financial flexibility and eliminates interest burden, with debt-to-equity ratio of 0.00.
- Adequate Liquidity: Current assets of ₹15.36 crores against current liabilities of ₹1.04 crores provide comfortable liquidity cushion.
- Stable Promoter Holding: Promoters maintain 52.57% stake with no pledging, indicating no financial distress at promoter level.
- NSE Membership: Access to National Stock Exchange trading infrastructure provides platform for brokerage operations.
- Historical Long-Term Returns: Five-year stock returns of 217.72% demonstrate past ability to create shareholder value, though recent trends have reversed.
- Trading Below Book Value: P/BV of 0.71x offers potential asset value protection, with book value at ₹103.34 per share vs market price of ₹72.60.
- Dividend Payment: Company paid dividend of ₹1 per share in September 2025, providing some income support despite operational challenges.
Key Concerns
- Revenue Collapse: Net sales of ₹0.01 crores per quarter represent virtually non-existent business activity, down 75.00% year-on-year.
- Profitability Implosion: Net profit of ₹0.02 crores in Q2 FY2026 marks 95.83% YoY decline, with earnings barely registering at meaningful levels.
- Weak Capital Efficiency: Average ROE of 7.78% and latest ROE of 2.74% reflect poor returns on shareholder capital of ₹15.50 crores.
- Zero Institutional Interest: Complete absence of FII, mutual fund, insurance, or DII holdings signals lack of institutional validation.
- Severe Stock Underperformance: Stock down 51.60% over past year with negative alpha of 62.01 percentage points vs Sensex.
- High Volatility: Stock volatility of 67.40% and beta of 1.50 indicate extremely high risk profile with "HIGH RISK LOW RETURN" classification.
- Bearish Technical Outlook: Stock in bearish trend, trading below all moving averages with uniformly negative technical indicators.
- Micro-Cap Liquidity: Market cap of just ₹12.00 crores with daily volumes of 45 shares creates severe liquidity constraints.
- Competitive Disadvantage: Unable to compete with larger, technology-enabled brokers in an increasingly digital brokerage landscape.
Outlook: What to Watch
Positive Catalysts
- Revenue Stabilisation: Any signs of net sales stabilising above ₹0.05 crores per quarter would indicate business is finding a floor.
- Client Acquisition: New client wins or partnership announcements that could drive transaction volumes and brokerage income.
- Technology Investments: Deployment of shareholder funds into modern trading platforms or digital capabilities to compete more effectively.
- Diversification Strategy: Entry into adjacent financial services or wealth management to reduce dependence on struggling brokerage operations.
- Margin Improvement: Sustainable improvement in operating margins through cost optimisation whilst maintaining service quality.
Red Flags
- Further Revenue Decline: Net sales falling below ₹0.01 crores or remaining at current negligible levels for multiple quarters.
- Return to Losses: Quarterly losses similar to Q1 FY2026's ₹0.21 crores loss would signal unsustainable cost structure.
- Promoter Selling: Any reduction in promoter holding from current 52.57% would indicate loss of confidence at promoter level.
- Cash Burn: Depletion of current assets below ₹10 crores would reduce financial flexibility and raise going concern questions.
- Regulatory Issues: Any compliance problems or suspension of NSE membership would eliminate core business capability.
- Continued Technical Weakness: Failure to reclaim 20-day moving average (₹77.03) or breach of 52-week low (₹65.00) would signal further downside.
The Verdict: Exit Recommended for This Struggling Micro-Cap
Score: 20/100
For Fresh Investors: Avoid completely. With net sales of just ₹0.01 crores per quarter, net profit collapsing 95.83% year-on-year, and zero institutional interest, First Custodian Fund presents an unattractive risk-reward profile. The micro-cap status, extreme volatility (67.40%), and severe liquidity constraints make this unsuitable for most investors. The company faces existential questions about business viability.
For Existing Holders: Strongly consider exiting at current levels or on any technical bounce towards ₹77-80. Whilst the stock trades below book value (₹103.34), this discount reflects legitimate concerns about the company's ability to generate future earnings. The 51.60% decline over the past year and bearish technical outlook suggest further downside risk. Only hold if you have extremely high risk tolerance and believe in a multi-year turnaround story.
Fair Value Estimate: ₹60-65 (15-20% downside risk from current ₹72.60), reflecting continued business deterioration and lack of catalysts for improvement.
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. First Custodian Fund is a micro-cap stock with extreme volatility and severe liquidity constraints. Past performance is not indicative of future results.
