Flomic Global Logistics Q2 FY26: Losses Deepen as Margins Collapse

The Mumbai-based freight forwarding and customs clearance services provider has witnessed a sharp deterioration in profitability, with the company slipping into losses for the second consecutive quarter. The PAT margin collapsed to negative 0.89% in Q2 FY26 from a positive 0.87% in the corresponding quarter of the previous year, highlighting severe operational challenges.

The stock has been in a persistent bearish technical trend, trading below all key moving averages including the 5-day, 20-day, 50-day, 100-day, and 200-day moving averages. With a proprietary Mojo Score of just 7 out of 100 and a "STRONG SELL" rating, the company faces mounting concerns from both fundamental and technical perspectives.

Financial Performance: Revenue Decline Compounds Margin Pressure

In Q2 FY26, Flomic Global Logistics reported net sales of ₹113.72 crores, marking a sequential improvement of 12.17% from Q1 FY26's ₹101.38 crores but representing a concerning 16.69% year-on-year decline from ₹136.51 crores in Q2 FY25. This revenue contraction comes despite the company operating in a growing logistics sector, suggesting potential market share losses or client-specific challenges.

The operating profit (PBDIT excluding other income) stood at ₹8.62 crores in Q2 FY26, translating to an operating margin of 7.58%. Whilst this represents a sequential improvement from Q1 FY26's 6.08%, it remains below the 7.85% achieved in the year-ago quarter. More alarmingly, the margin has deteriorated significantly from the 10.00% level recorded in Mar'24, indicating sustained pressure on operational efficiency.

The company's gross profit margin compressed to 5.43% in Q2 FY26 from 6.23% in Q2 FY25, reflecting the challenging pricing environment and cost pressures. Employee costs rose to ₹11.80 crores from ₹9.56 crores year-on-year, a 23.43% increase that outpaced revenue growth and contributed materially to margin erosion.

Interest costs declined marginally to ₹2.73 crores from ₹3.28 crores year-on-year, providing some relief. However, depreciation remained elevated at ₹6.96 crores, consuming a substantial portion of operating profits. The combination of margin compression and fixed costs resulted in a pre-tax loss of ₹0.78 crores, which after tax adjustments translated to the net loss of ₹1.01 crores.

Operational Challenges: Profitability Crisis Deepens

The deterioration in Flomic Global's operational performance extends beyond top-line weakness. The company's profit before tax less other income plummeted to negative ₹1.07 crores in Q2 FY26, representing a staggering 185.3% decline compared to the previous four-quarter average. This metric strips away non-operational income to reveal the true health of core business operations, and the results are deeply concerning.

The company's average return on equity stands at 15.32% over the long term, which appears respectable on the surface. However, the latest quarter's ROE has collapsed to negative 2.18%, indicating value destruction for shareholders. This dramatic reversal from historically strong capital efficiency metrics underscores the severity of current operational difficulties.

The company's debt-to-equity ratio of 0.65 indicates moderate leverage, which whilst not alarming in isolation, becomes more concerning given the current loss-making status. With negative operating cash flow of ₹16.66 crores in the latest annual period, the company faces potential liquidity pressures if the operational turnaround is delayed.

Industry Context: Underperformance in a Growing Sector

The Transport Services sector has delivered robust returns of 25.60% over the past year, making Flomic Global's 25.37% decline particularly stark. This 50.97 percentage point underperformance versus the sector benchmark highlights company-specific issues rather than broader industry headwinds.

The Indian logistics sector has benefited from e-commerce growth, infrastructure development, and increasing formalisation following GST implementation. Major players in the sector have reported healthy growth and margin expansion, making Flomic Global's struggles an outlier rather than the norm. The company's inability to capitalise on favourable industry tailwinds suggests deeper structural or execution challenges.

Peer Comparison: Valuation Disconnect with Fundamentals

Flomic Global's current trading metrics present a paradox when compared to sector peers. The company trades at a price-to-book value of 2.26x, which appears reasonable relative to some peers but disconnected from its loss-making status and negative momentum.

Flomic Global's historical average ROE of 15.32% stands out favourably against peers, most of whom report single-digit or negligible returns on equity. However, this historical strength provides little comfort given the current negative ROE of 2.18%. The company's moderate leverage of 0.65 debt-to-equity sits in the middle of the peer range, neither a significant advantage nor disadvantage.

The minimal dividend yield of 0.19% reflects the company's strained financial position. With a latest dividend of just ₹0.10 per share and loss-making operations, dividend sustainability appears questionable. In contrast, Patel Integrated offers a 2.18% yield whilst maintaining profitability, highlighting Flomic Global's relative weakness in shareholder returns.

Valuation Analysis: Expensive Despite Losses

The company's valuation assessment presents a striking anomaly. Despite reporting consecutive quarterly losses and deteriorating fundamentals, Flomic Global is rated as "EXPENSIVE" by valuation metrics. This disconnect stems from the stock's price-to-book ratio of 2.26x against a backdrop of negative earnings and compressed margins.

The EV-to-EBITDA multiple of 5.14x might appear modest in isolation, but when contextualised with shrinking EBITDA and negative trends, it suggests limited value for investors. The EV-to-Sales ratio of 0.41x indicates the market is assigning relatively low revenue multiples, yet even this appears generous given the 16.69% year-on-year revenue decline.

The stock trades 33.74% below its 52-week high of ₹79.99, which occurred during a period of better operational performance. However, even at current levels of ₹53.00, the valuation appears stretched relative to near-term earnings visibility. The absence of institutional holdings (0.00% FII and mutual fund ownership) signals lack of confidence from sophisticated investors who typically conduct rigorous due diligence.

The valuation grade has oscillated between "Expensive" and "Very Expensive" over recent months, never achieving a "Fair" or "Attractive" rating despite the sharp price decline. This suggests that fundamental deterioration has kept pace with price corrections, preventing the emergence of compelling value.

Shareholding Pattern: Promoter Confidence Amid Institutional Absence

The shareholding structure reveals a promoter-dominated company with minimal institutional participation. Promoter holding stands at 69.17% as of September 2025, having jumped dramatically from 26.34% in December 2024 following a significant 42.83% increase in March 2025. This substantial increase in promoter stake demonstrates confidence from the company's leadership, though it also highlights the absence of external validation from institutional investors.

The complete absence of foreign institutional investors, mutual funds, and insurance companies is noteworthy. Zero institutional holdings indicate that professional fund managers have either exited or never established positions in the stock, likely due to concerns about liquidity, governance, or growth prospects. The non-institutional shareholding declined sharply from 73.66% to 30.83% when promoters increased their stake, suggesting retail investors may have used the opportunity to exit.

Key promoters include Lancy Raphael Barboza (46.25%), Anita Lancy Barboza (12.48%), and Manas Strategic Consultants Private Limited (10.25%). Positively, there is no promoter pledging, eliminating one potential risk factor. However, the concentration of ownership in promoter hands without institutional participation raises questions about corporate governance oversight and limits the stock's appeal to institutional buyers.

Stock Performance: Persistent Underperformance Across Timeframes

Flomic Global's stock price trajectory reflects the underlying fundamental deterioration with alarming consistency. The shares have declined 25.37% over the past year, massively underperforming the Sensex's 9.50% gain by 34.87 percentage points. This negative alpha extends across virtually all meaningful timeframes, painting a picture of sustained value destruction.

The technical picture reinforces the bearish fundamental outlook. The stock trades below all major moving averages, with the current price of ₹53.00 sitting 6.39% below the 5-day moving average of ₹56.57, 11.72% below the 50-day average of ₹57.36, and 16.96% below the 200-day average of ₹63.83. This alignment of moving averages in descending order characterises a strong downtrend with no signs of stabilisation.

The stock's beta of 1.50 indicates high volatility relative to the market, with annualised volatility of 51.30% compared to the Sensex's 12.26%. This elevated risk profile, combined with negative returns, places Flomic Global firmly in the "HIGH RISK LOW RETURN" category. The risk-adjusted return of negative 0.49 over one year compares unfavourably with the Sensex's positive 0.77, highlighting that investors are being penalised rather than compensated for taking on additional risk.

Investment Thesis: Multiple Red Flags Converge

The investment case for Flomic Global is severely compromised by the convergence of negative factors across all four critical parameters. The company's Mojo Score of just 7 out of 100 reflects this comprehensive weakness, placing it firmly in "STRONG SELL" territory.

The financial trend has been classified as "NEGATIVE" since June 2025, with operating cash flow hitting a low of ₹16.66 crores annually and quarterly PAT declining 418.1% versus the previous four-quarter average. The quality grade of "BELOW AVERAGE" reflects the company's recent struggles despite historically decent performance metrics.

Most concerning is the expensive valuation despite deteriorating fundamentals. The stock's price-to-book ratio of 2.26x appears unjustified for a loss-making company with negative momentum. This valuation-fundamental disconnect suggests significant downside risk if the market re-rates the stock to reflect current operational realities.

Key Strengths & Risk Factors

Outlook: What to Watch

The near-term outlook hinges critically on the company's ability to arrest the profitability decline and demonstrate sustainable operational improvements. Management's execution capabilities will be tested as they navigate margin pressures, cost optimisation, and revenue stabilisation. The Q3 FY26 results will be pivotal in determining whether Q2's sequential improvement represents a genuine turnaround or merely a temporary reprieve in a longer deterioration cycle.