Goenka Business & Finance Q2 FY26: Losses Deepen Amid Revenue Volatility and Rising Interest Burden

The quarter's results underscore the structural challenges facing this small NBFC, which has struggled to generate consistent profitability despite occasional revenue spikes. With promoter holding at just 14.91% and zero institutional participation, the company operates with minimal market oversight and a highly concentrated retail shareholder base of 85.09%. The stock has plunged 33.75% over the past year, significantly underperforming the Non Banking Financial Company sector's 23.56% gain by a staggering 57.31 percentage points.

The current advisory rating stands at SELL with a Mojo score of just 33 out of 100, reflecting deep concerns about the company's financial trajectory, operational efficiency, and overall quality metrics. With an average Return on Equity of merely 3.61% over recent periods and the latest quarterly ROE at a deeply negative -9.92%, Goenka Business & Finance exemplifies a business struggling to generate adequate returns on shareholder capital.

Financial Performance: Revenue Volatility Masks Structural Profitability Crisis

Q2 FY26 witnessed a dramatic 300.13% quarter-on-quarter revenue surge to ₹31.41 crores from ₹7.85 crores in Q1 FY26, yet this apparent growth milestone tells only part of the story. On a year-on-year basis, revenue actually declined 18.90% from ₹38.73 crores in Q2 FY25, highlighting the erratic nature of the company's income streams. This volatility—with quarterly revenues swinging wildly between ₹7.85 crores and ₹38.73 crores over the past year—suggests an unstable business model lacking predictable cash flows.

The operating profit before depreciation, interest, and tax (PBDIT) excluding other income stood at ₹2.49 crores in Q2 FY26, representing a margin of just 7.93%. This marked a sharp contraction from the 49.04% margin achieved in Q1 FY26, though that quarter's exceptionally high margin on low revenue base (₹7.85 crores) appears anomalous. More concerning is the comparison with Q2 FY25's margin of 11.08%, indicating deteriorating operational efficiency year-on-year.

The company's Achilles' heel remains its interest burden, which consumed ₹5.10 crores in Q2 FY26—an 18.88% increase from ₹4.29 crores in Q1 FY26 and a substantial 51.79% jump from ₹3.36 crores in Q2 FY25. With interest costs now exceeding operating profit, the company generated a loss before tax of ₹2.37 crores, compared to a loss of ₹0.43 crores in the previous quarter. Even after a tax benefit of ₹0.41 crores (at an effective rate of 17.30%), the net loss widened to ₹1.97 crores.

The quality of earnings remains questionable, with other income contributing a negligible ₹0.23 crores in Q2 FY26 after being virtually absent in previous quarters. For the full year FY25, the company reported revenues of ₹75.00 crores (down 11.8% from ₹85.00 crores in FY24) and managed to break even with zero profit after tax, a decline from the ₹2.00 crore profit in FY24. The longer-term trend is even more alarming: revenues have collapsed from ₹1,420.00 crores in FY22 to current levels, representing a catastrophic 94.7% decline over three years.

Operational Challenges: Negative Returns and Capital Destruction

The company's Return on Equity tells a sobering tale of capital destruction. The latest quarterly ROE stands at a deeply negative -9.92%, whilst the average ROE over recent periods is a meagre 3.61%—far below the cost of capital and inadequate for any sustainable business. For context, even the peer group average hovers around 2% to 7.78%, with Goenka Business sitting in the middle of a generally weak cohort. A healthy NBFC should deliver ROE in the mid-teens or higher; single-digit returns signal fundamental business model flaws.

The balance sheet as of March 2025 reveals shareholder funds of ₹31.21 crores (comprising ₹13.00 crores share capital and ₹18.21 crores reserves), marginally down from ₹31.46 crores in March 2024. With current liabilities at ₹173.12 crores and current assets at just ₹12.81 crores, the company operates with a severely negative working capital position. Fixed assets remain minimal at ₹0.04 crores, and the company holds zero long-term debt, suggesting it relies entirely on short-term borrowings to fund operations—a precarious financing structure for any financial services firm.

The ROCE (Return on Capital Employed) calculation shows a surprisingly high 44.48%, but this metric must be interpreted with extreme caution given the company's negative profitability and minimal capital base. With negligible fixed assets and investments, the denominator in the ROCE calculation becomes very small, artificially inflating the ratio. This figure does not reflect genuine operational efficiency but rather the mathematical consequence of an asset-light, loss-making structure.

Asset Quality Analysis: Limited Disclosure Raises Transparency Concerns

As a registered NBFC, Goenka Business & Finance operates under Reserve Bank of India oversight, yet the available financial disclosures provide limited visibility into critical asset quality metrics. The company's business model centres on providing secured and unsecured loans and advances, along with investments in quoted and unquoted securities. However, detailed breakdowns of loan book composition, non-performing asset ratios, provisioning coverage, or asset under management growth are conspicuously absent from public disclosures.

The cash flow statement for FY25 shows negative operating cash flow of ₹1.00 crore, following negative ₹5.00 crores in FY24, indicating the company is burning cash in its core operations. With closing cash of zero as of March 2025 (down from ₹2.00 crores in March 2024), liquidity appears extremely constrained. The absence of any cash flow from investing or financing activities suggests limited access to capital markets or investor confidence.

Trade payables stood at ₹0.93 crores as of March 2025, largely unchanged from ₹0.92 crores the previous year, whilst other current liabilities ballooned to ₹173.12 crores from ₹164.44 crores. This ₹8.68 crore increase in current liabilities, combined with declining current assets, points to deteriorating liquidity and potential working capital stress. For an NBFC, maintaining adequate liquidity buffers is paramount; Goenka Business appears to be operating on the edge.

Industry Leadership: How Goenka Business Compares to Peers

Within the fragmented NBFC landscape, Goenka Business & Finance occupies the lower echelons alongside other micro-cap financial services firms. The peer comparison reveals a sector struggling with profitability, though Goenka's position offers some relative bright spots amidst generally weak fundamentals across the cohort.

Goenka Business trades at a price-to-book value of 0.40x, representing a significant discount to book value and the lowest in its peer group (excluding Classic Leasing's negative P/BV). This deep discount reflects market scepticism about the company's ability to generate returns on its stated book value of ₹24.01 per share. With the stock trading at ₹9.05, investors are essentially pricing in substantial book value erosion or questioning the quality of reported assets.

On the positive side, Goenka Business reports a 3.61% average ROE, which, whilst woefully inadequate in absolute terms, actually positions it as one of the better performers in this peer group where most companies report zero or negative ROE. First Custodian leads with 7.78% ROE, but even this figure falls well short of acceptable standards for financial services firms. The peer group's collective weakness suggests systemic challenges facing micro-cap NBFCs, including limited access to low-cost funding, operational inefficiencies, and difficulty achieving scale.

With a market capitalisation of ₹12.00 crores, Goenka Business ranks third among its peer group—a reflection of both its small absolute size and the market's dim view of its prospects. The absence of any debt (Debt to Equity of 0.00) across most peers, including Goenka, is noteworthy but not necessarily positive; it may indicate an inability to access debt capital markets rather than conservative financial management.

Valuation Analysis: Deep Discount Reflects Fundamental Concerns

Goenka Business & Finance's valuation metrics paint a picture of a deeply distressed micro-cap financial services firm trading at levels that reflect severe market pessimism. The company's P/E ratio stands at "NA (Loss Making)" due to negative earnings over the trailing twelve months, immediately disqualifying it from traditional earnings-based valuation frameworks. With losses mounting rather than narrowing, there is no clear path to positive earnings that would allow for meaningful P/E multiple analysis.

The price-to-book value of 0.40x represents a 60% discount to stated book value, suggesting the market believes either that assets are overvalued on the balance sheet or that the company will continue destroying shareholder value through ongoing losses. At ₹9.05 per share versus a book value of ₹24.01, investors are pricing in substantial downside risk. For comparison, healthy NBFCs typically trade at 1.5x to 3.0x book value; trading below book is a red flag indicating distress or terminal decline.

The EV/EBITDA multiple of 0.89x and EV/Sales of 0.18x appear superficially attractive, but these metrics are misleading for a loss-making entity. Enterprise value calculations become problematic when a company operates with negative cash flows and minimal tangible assets. The low multiples primarily reflect the tiny market capitalisation rather than genuine value opportunity. EV/Capital Employed at 0.39x similarly reflects the market's assessment that deployed capital is not generating adequate returns.

The company's valuation grade has fluctuated between "Fair," "Expensive," and currently "Very Expensive," with the latest designation as of May 2025. This "Very Expensive" label may seem counterintuitive given the low absolute price and discount to book value, but it reflects the proprietary scoring methodology's assessment that even at current levels, the stock does not offer adequate compensation for its risks and poor quality metrics. In essence, the valuation is expensive relative to the underlying business quality and prospects.

The 52-week price range of ₹6.06 to ₹13.66 shows significant volatility, with the current price sitting 33.75% below the high and 49.34% above the low. This wide range reflects both speculative trading interest in this illiquid micro-cap and the genuine uncertainty about the company's future trajectory. With average daily volumes around 28,755 shares and minimal institutional interest, price discovery remains inefficient and subject to manipulation.

Shareholding: Promoter Minority and Retail Dominance Raise Governance Concerns

The shareholding pattern of Goenka Business & Finance reveals an unusual and potentially problematic ownership structure. Promoter holding stands at just 14.91%, unchanged over the past five quarters, representing a minority stake that raises questions about management commitment and alignment with minority shareholders. The sole promoter entity, Rise High Tracom Private Limited, controls this 14.91% stake, leaving 85.09% in the hands of non-institutional retail investors.

The complete absence of institutional investors—zero Foreign Institutional Investors (FIIs), zero Mutual Funds, zero Insurance Companies, and zero Other Domestic Institutional Investors—speaks volumes about professional investors' assessment of this company. Institutional investors typically conduct rigorous due diligence and demand high governance standards; their total absence suggests fundamental concerns about business quality, transparency, or growth prospects that have deterred professional capital.

The 85.09% non-institutional holding, completely unchanged for at least five quarters, indicates a stagnant shareholder base with limited liquidity. This concentration in retail hands, combined with minimal promoter skin in the game, creates potential governance risks and reduces accountability. The absence of pledged shares is a minor positive, but with promoters holding less than 15%, there is limited equity to pledge in any case.

For investors, this shareholding structure presents multiple red flags: minimal promoter commitment, zero institutional validation, illiquid trading (facilitating potential price manipulation), and lack of sophisticated shareholders who might push for improved governance or strategic changes. The frozen nature of the shareholding pattern over multiple quarters suggests either a locked-in shareholder base or, more likely, minimal trading interest in what is essentially an orphaned micro-cap stock.

Stock Performance: Severe Underperformance Across All Timeframes

The stock price performance of Goenka Business & Finance tells a tale of consistent value destruction across virtually all meaningful timeframes. Over the past year, shares have plummeted 33.75% whilst the Sensex gained 9.01%, resulting in a negative alpha of 42.76 percentage points—a staggering underperformance that reflects fundamental business deterioration rather than mere market volatility.

Recent short-term performance shows some volatility, with the stock gaining 17.38% over the past month and 5.72% over the past week, generating positive alpha of 16.55 and 5.08 percentage points respectively. However, these short-term bounces appear to be technical oversold rallies rather than fundamental improvements, given the deteriorating quarterly results. Year-to-date, the stock is up 18.46% versus the Sensex's 1.11% decline, but this largely reflects recovery from deeply oversold levels rather than sustainable momentum.

The medium-term picture remains decidedly negative, with 3-month returns at -6.51% and 6-month returns at -5.63%, both underperforming the benchmark. The stock's beta of 1.49 classifies it as a high-beta security, meaning it tends to amplify market movements—falling harder in downturns and potentially rising faster in upswings. However, the risk-adjusted return of -0.62 over the past year, combined with volatility of 54.72%, places it firmly in the "HIGH RISK LOW RETURN" category—the worst possible quadrant for investors.

Compared to the Non Banking Financial Company sector's 23.56% gain over the past year, Goenka Business has underperformed by a catastrophic 57.31 percentage points. This massive underperformance versus both the broader market and its specific sector peers confirms that the company's challenges are idiosyncratic rather than sector-wide, reflecting company-specific operational and financial weaknesses.

The longer-term perspective offers little comfort. Whilst the 5-year return of 267.89% appears impressive, this primarily reflects recovery from extremely depressed levels following the revenue collapse from ₹1,420 crores in FY22. The 10-year return of -92.98% versus the Sensex's 254.70% gain represents an alpha of -347.68 percentage points—a stunning long-term value destruction that should give any prospective investor serious pause.

Investment Thesis: Multiple Red Flags Overwhelm Limited Positives

The investment thesis for Goenka Business & Finance is overwhelmingly negative, with the Mojo 4 Dots analysis revealing weakness across all key parameters. The company's Near Term Drivers show mixed signals—whilst the quarterly financial trend recently turned positive, the technical picture remains mildly bearish. Quality assessment grades the company as "Below Average," reflecting its weak long-term financial performance with an average ROE of just 3.61%. Valuation, despite the low absolute price, is rated "Very Expensive" relative to the poor quality of the underlying business. The overall assessment is decidedly "Mixed" at best, though the weight of evidence tilts heavily negative.

The company's Mojo score of 33 out of 100 places it firmly in SELL territory (30-50 range), with the recommendation to "Consider selling" and "Look for exit opportunities." This score has been consistently weak, having briefly touched 33 (SELL) in March 2025 before deteriorating to 28 (STRONG SELL) and then marginally improving back to the current 33. The key concerns limiting the score include the stock's bearish technical trend and weak long-term fundamental strength evidenced by the meagre 3.61% average ROE.

The current technical trend classification of "Mildly Bearish," established on January 28, 2026 at ₹8.31, represents a slight improvement from the previous "Bearish" trend but remains negative overall. Technical indicators show mixed signals across weekly and monthly timeframes, with MACD showing mildly bullish on weekly but mildly bearish on monthly charts. The stock trades below all major moving averages (5-day, 20-day, 50-day, 100-day, and 200-day), indicating persistent selling pressure and lack of sustained buying interest.

Key Strengths & Risk Factors

Outlook: Critical Juncture Requiring Operational Transformation

Goenka Business & Finance stands at a critical juncture where immediate operational improvements are essential for survival, let alone growth. The company must urgently address its interest cost structure, which has grown 51.79% year-on-year to ₹5.10 crores whilst revenues declined 18.90%. Without a significant reduction in borrowing costs or a dramatic improvement in asset yields, the path to profitability remains blocked. Management's ability to renegotiate funding terms, reduce reliance on expensive short-term borrowings, or access lower-cost capital sources will determine whether the company can stabilise its financial position.

Revenue stabilisation represents another critical priority. The wild quarterly swings—from ₹7.85 crores to ₹31.41 crores and back—indicate either a highly cyclical business model, lumpy transaction-based income, or operational inconsistency. Establishing predictable, recurring revenue streams through a more diversified loan book or systematic origination process would greatly enhance business quality and investor confidence. The current model appears unsustainable and suggests either inadequate underwriting standards or excessive concentration in volatile sectors.

The broader NBFC sector's 23.56% gain over the past year, whilst Goenka Business declined 33.75%, demonstrates that sector headwinds alone cannot explain the company's underperformance. Peer NBFCs with stronger fundamentals, better governance, and more diversified funding sources have thrived, suggesting the challenges facing Goenka Business are largely self-inflicted and company-specific. This also means that sector tailwinds, should they emerge, may not automatically benefit Goenka unless it first addresses its internal operational and financial weaknesses.

For existing shareholders, the outlook is challenging. The combination of persistent losses, minimal promoter commitment, zero institutional validation, and severe underperformance across timeframes suggests limited near-term catalysts for improvement. The recent positive financial trend classification offers a glimmer of hope, but one positive quarter does not make a turnaround—particularly when that quarter still resulted in losses. Investors should monitor upcoming quarterly results closely for signs of sustained improvement in both revenue stability and interest cost management.