Glance Finance Q2 FY26: Profitability Plunges 78% Amid Revenue Volatility

The quarter's performance reveals a company struggling with operational consistency. Whilst net sales for Q2 FY2026 stood at ₹0.80 crores—marginally higher by 1.27% year-on-year from ₹0.79 crores in Q2 FY2025—the sequential decline of 8.05% from Q1 FY2026's ₹0.87 crores underscores the erratic revenue trajectory. More concerning is the dramatic compression in profitability margins, with the profit after tax margin collapsing to 25.00% from an extraordinary 115.19% recorded in the same quarter last year.

On a half-yearly basis for H1 FY2026, the company generated net sales of ₹1.67 crores and net profit of ₹1.11 crores. However, this represents a significant deterioration from the corresponding period last year, with the company's financial trend now classified as "Negative" by proprietary analysis metrics. The operating profit margin, whilst still elevated at 296.25% for Q2 FY2026, reflects the company's unusual business model where operating profits substantially exceed reported revenues—a pattern that warrants careful scrutiny.

Quarterly Performance Trend: Extreme Volatility Persists

The quarterly trend table above illustrates the profound inconsistency in Glance Finance's operations. Revenue has swung wildly between ₹0.79 crores and ₹10.83 crores over the past seven quarters, with no discernible pattern. The September 2024 quarter witnessed an extraordinary 1270.89% quarter-on-quarter surge in net sales to ₹10.83 crores, only to collapse by 61.77% in the subsequent quarter. This extreme volatility suggests a business model heavily dependent on sporadic, large transactions rather than steady recurring income—a significant red flag for an NBFC.

Financial Performance Analysis: Margin Compression and Tax Anomalies

Examining the financial performance in granular detail reveals several concerning trends. For Q2 FY2026, net sales of ₹0.80 crores generated an operating profit (PBDIT excluding other income) of ₹2.37 crores, yielding an operating margin of 296.25%. This counter-intuitive metric—where operating profit exceeds revenue by nearly three times—stems from the company's money market operations and financial activities, which may include mark-to-market gains or revaluations not reflected in the top line.

The profit before tax for Q2 FY2026 stood at ₹0.87 crores, down 42.00% quarter-on-quarter from ₹1.50 crores in Q2 FY2025. However, the most striking anomaly lies in the tax treatment. The company incurred a tax expense of ₹0.67 crores against a pre-tax profit of ₹0.87 crores, resulting in an effective tax rate of 77.01%—far exceeding the statutory corporate tax rate of approximately 25-30%. This extraordinarily high tax rate compressed net profit to just ₹0.20 crores, representing a PAT margin of 25.00%.

Comparing this to the previous quarter (Q1 FY2026), the tax rate was even more extreme at 94.87%, leaving virtually no profit after tax. Such elevated tax rates could indicate deferred tax adjustments, disallowed expenses, or other non-recurring tax provisions. The lack of transparency around these tax charges raises questions about the quality of earnings and sustainability of reported profits.

Balance Sheet Quality: Adequate Capital but Low Leverage

Glance Finance's balance sheet as of March 2025 reflects a company with adequate shareholder funds of ₹44.71 crores, comprising share capital of ₹2.28 crores and reserves of ₹42.44 crores. The book value per share stands at ₹196.52, whilst the stock trades at ₹220.00, implying a price-to-book ratio of 1.11x—relatively modest for an NBFC, though the company's weak return on equity of 5.10% provides little justification for even this limited premium.

Notably, the company carries zero long-term debt, resulting in a debt-to-equity ratio of just 0.08—amongst the lowest in its peer group. Whilst low leverage reduces financial risk, it also suggests underutilisation of the financial leverage that typically drives NBFC profitability. Current liabilities stood at ₹11.96 crores as of March 2025, down from ₹13.84 crores the previous year, indicating improved working capital management.

Fixed assets declined from ₹23.01 crores in March 2024 to ₹15.82 crores in March 2025, reflecting depreciation charges of ₹6.00 crores during the year. Current assets increased to ₹28.25 crores from ₹20.62 crores, suggesting a shift towards more liquid holdings. The company maintains no investments on its books, focusing its asset base entirely on fixed assets and current assets, primarily comprising receivables and cash.

Return on Equity: Weak Capital Efficiency Undermines Value Creation

The company's average return on equity of 5.10% over recent periods is considerably below acceptable standards for a financial services company. This weak ROE indicates poor capital efficiency, with the company generating just ₹5.10 of profit for every ₹100 of shareholder equity deployed. For context, well-managed NBFCs typically deliver ROEs in the range of 15-20%, whilst the peer group average stands around 8%.

The latest quarterly ROE of 3.58% represents further deterioration, indicating that the company's ability to generate returns on equity has worsened in recent periods. This decline, coupled with the negative financial trend classification, suggests that operational challenges are intensifying rather than improving. The company's return on capital employed (ROCE) of 9.00% is marginally better but still underwhelming, reflecting the low-leverage capital structure that limits financial returns.

Peer Comparison: Valuation Discount Reflects Fundamental Weakness

Within its peer group of micro-cap NBFCs, Glance Finance trades at a P/E ratio of 31.02x—in line with Bridge Securities (31.81x) but at a significant premium to Arnold Holdings (13.76x). However, this valuation appears unjustified when considering the company's weak ROE of 5.10%, which exceeds only SPA Capital Services (2.82%) and Mega Corp (0.67%) amongst peers. Bridge Securities, trading at a similar P/E multiple, delivers an ROE of 31.70%—more than six times higher than Glance Finance.

The price-to-book ratio of 1.11x represents a modest premium to book value, lower than most peers except Arnold Holdings (0.87x). This relatively subdued valuation multiple reflects investor scepticism about the company's ability to generate adequate returns on equity. With a market capitalisation of just ₹46.00 crores, Glance Finance ranks last amongst its peer group, highlighting its limited scale and market presence.

Valuation Analysis: Premium Unjustified by Fundamentals

Despite trading at what appears to be a reasonable P/E ratio of 31.02x compared to the industry average of 24x, Glance Finance's valuation cannot be considered attractive when assessed against its fundamental performance. The company's proprietary quality grade of "Below Average" and overall Mojo Score of just 36 out of 100 underscore the significant risks embedded in the current share price of ₹220.00.

The valuation grade has oscillated between "Expensive" and "Very Expensive" over recent months, currently classified as "Very Expensive" as of November 3, 2025. This assessment reflects the disconnect between the company's weak operational performance and its market pricing. The EV/EBITDA multiple of 5.45x appears modest, but this metric is distorted by the company's unusual accounting where operating profits exceed revenues.

The stock has delivered extraordinary returns over longer timeframes—up 56.03% over one year, 243.75% over two years, and an astonishing 576.92% over five years. However, these historical gains primarily reflect recovery from extremely depressed levels rather than sustainable fundamental improvement. The stock's beta of 1.50 indicates high volatility relative to the broader market, with risk-adjusted returns of 0.79 suggesting that much of the recent outperformance has come with commensurate risk.

Shareholding Pattern: Stable Promoter Base, Zero Institutional Interest

The shareholding pattern reveals absolute stability, with promoter holding locked at 74.34% over the past several quarters. The promoter group comprises three limited liability partnerships—Ashish Commercials LLP (24.69%), Chitrakut Ventures LLP (24.65%), and Bhadrasila Ventures LLP (24.38%)—along with individual promoter Narendra Sardarsingh Karnavat (0.63%). Importantly, there is no promoter pledging, eliminating concerns about forced selling or financial distress at the promoter level.

However, the complete absence of institutional participation—zero holdings by foreign institutional investors, mutual funds, insurance companies, and other domestic institutional investors—represents a significant red flag. Institutional investors conduct rigorous due diligence before committing capital, and their total absence from the shareholder register suggests that sophisticated investors have found the company's business model, governance, or growth prospects unattractive. The 25.66% non-institutional shareholding represents retail and non-institutional investors who may lack the resources for comprehensive analysis.

Stock Performance: Short-Term Strength Masks Fundamental Weakness

Glance Finance has delivered spectacular returns over medium to long-term horizons, significantly outperforming the Sensex across all measured periods beyond one week. The six-month return of 68.39% generated alpha of 65.08% versus the benchmark, whilst the one-year return of 56.03% outpaced the Sensex by 52.38 percentage points. Over three years, the stock has surged 263.94%, crushing the Sensex's 36.69% gain by a margin of 227.25%.

However, these impressive historical returns must be contextualised. The stock's extraordinary gains primarily reflect recovery from severely depressed levels following years of operational struggles. The five-year return of 576.92%, whilst eye-catching, started from a base when the company was generating minimal revenues and profits. More recently, the stock has underperformed over the past week, declining 1.94% and generating negative alpha of -0.64% versus the Sensex.

From a technical perspective, the stock currently trades in a "Bullish" trend as of October 29, 2025, having changed from "Mildly Bullish" just days earlier. The stock trades above all key moving averages—5-day (₹219.51), 20-day (₹209.78), 50-day (₹202.30), 100-day (₹185.84), and 200-day (₹169.74)—suggesting technical momentum remains intact despite fundamental concerns. However, the high beta of 1.50 and volatility of 70.61% underscore the significant price risk inherent in the stock.

Investment Thesis: Multiple Red Flags Outweigh Technical Momentum

The investment case for Glance Finance is severely compromised by multiple structural weaknesses that outweigh any short-term technical strength. The company's Mojo Score of 36 out of 100 places it firmly in "SELL" territory, reflecting poor performance across all four key assessment parameters: valuation (Very Expensive), quality (Below Average), financial trend (Negative), and mixed technical signals.

The company's quality assessment as "Below Average" stems from its weak average ROE of 5.10%, which indicates poor capital efficiency and value destruction for shareholders. Whilst the company has demonstrated healthy long-term sales growth of 56.18% CAGR over five years, this growth has not translated into proportionate profitability or sustainable returns. The absence of any institutional holdings further validates concerns about the company's fundamental quality and governance standards.

Key Strengths & Risk Factors

Outlook: What to Watch

Looking ahead, the key monitoring points centre on whether management can stabilise the business model and deliver consistent, quality earnings. The company's money market operations and financial activities have produced erratic results that make forward earnings projections virtually impossible. Investors should watch for sustained improvement in quarterly revenue stability, normalisation of tax charges, and meaningful enhancement in return on equity metrics.

The absence of institutional participation remains a critical concern that will only be addressed through improved operational transparency, enhanced governance standards, and demonstration of sustainable profitability. Until these fundamental improvements materialise, the stock's valuation premium appears unjustified, and the risk-reward profile remains unfavourable despite recent technical strength.