The stock has been under severe pressure, declining 38.19% over the past year to close at ₹11.25 on February 13, 2026, down 46.93% from its 52-week high of ₹21.20. Trading in a mildly bearish technical trend, the stock remains below all key moving averages, with institutional investors largely absent from the shareholding pattern. The company's Mojo Score stands at a dismal 17 out of 100, firmly in "STRONG SELL" territory.
Established in May 1960 to provide financial assistance to small and medium-scale industrial units across Gujarat, GSFC has devolved into a case study of institutional failure. The company's balance sheet reveals a shareholder deficit exceeding ₹3,060 crores against current liabilities of ₹3,280.62 crores, whilst fixed assets stand at a mere ₹1.97 crores. With promoter holding at 83.95% (primarily the Governor of Gujarat and Small Industries Development Bank of India), the company operates as a zombie institution sustained by government backing.
Financial Performance: A Spiral of Deterioration
Gujarat State Financial Corporation's Q3 FY26 results underscore a complete collapse in revenue-generating capacity. Net sales plummeted to absolute zero in the quarter, down from ₹0.05 crores in Q2 FY26 and ₹0.09 crores in Q1 FY26. This represents a catastrophic 100% quarter-on-quarter decline and a 100% year-on-year contraction, signalling the effective cessation of operational activities.
| Quarter | Net Sales (₹ Cr) | Interest (₹ Cr) | Net Loss (₹ Cr) | Other Income (₹ Cr) |
|---|---|---|---|---|
| Dec'25 | 0.00 | 35.65 | -31.93 | 4.14 |
| Sep'25 | 0.05 | 35.54 | -31.96 | 4.05 |
| Jun'25 | 0.09 | 35.02 | -31.02 | 3.98 |
| Mar'25 | 0.25 | 34.53 | -31.02 | 4.04 |
| Dec'24 | -0.97 | 35.18 | -31.66 | 3.78 |
| Sep'24 | 0.34 | 35.06 | -31.45 | 3.79 |
| Jun'24 | 0.53 | 34.56 | -31.22 | 3.60 |
The company's quarterly loss of ₹31.93 crores in Q3 FY26 marginally improved from ₹31.96 crores in Q2 FY26 (a negligible 0.09% quarter-on-quarter improvement) but worsened by 0.88% year-on-year from ₹31.66 crores in Q3 FY25. Operating profit before depreciation, interest, and tax (PBDIT) stood at ₹3.64 crores in Q3 FY26, up from ₹3.43 crores in the previous quarter, driven entirely by other income of ₹4.14 crores. However, this pales in comparison to the quarterly interest burden of ₹35.65 crores.
The fundamental problem is structural: GSFC's interest obligations of approximately ₹35-36 crores per quarter vastly exceed any conceivable operational income. With operating profit excluding other income standing at negative ₹0.50 crores in Q3 FY26, the company is entirely dependent on other income (likely from legacy investments or treasury operations) to offset a fraction of its interest costs. Even with other income factored in, the company generates PBDIT of just ₹3.64 crores against interest expenses of ₹35.65 crores—a coverage ratio of barely 0.10x.
Critical Financial Distress Indicators
Negative Shareholder Funds: The company's balance sheet shows shareholder funds of negative ₹3,060.59 crores as of March 2025, reflecting accumulated losses of ₹3,154.31 crores against share capital of just ₹93.72 crores. This represents complete erosion of equity capital multiple times over.
Interest Coverage Crisis: With quarterly interest obligations of ₹35.65 crores and PBDIT of ₹3.64 crores, the company cannot service even 10% of its interest burden from operational activities.
Zero Tax Liability: The company has paid zero taxes across all observed quarters, a clear indication of sustained loss-making operations that offer no tax shield value.
Balance Sheet Deterioration: A Zombie Institution
Gujarat State Financial Corporation's balance sheet tells the story of an institution that exists in name only. As of March 2025, the company reported shareholder funds of negative ₹3,060.59 crores, comprising share capital of ₹93.72 crores offset by reserves and surplus of negative ₹3,154.31 crores. This represents cumulative losses that have wiped out equity capital more than 32 times over.
Current liabilities stand at ₹3,280.62 crores against minimal fixed assets of ₹1.97 crores and zero current assets. The company has no long-term debt on its books, suggesting that its liabilities are primarily operational or short-term in nature. With zero investments reported and negligible fixed assets, GSFC has effectively ceased functioning as a financial institution. The company generated negative cash flow from operations of ₹13.00 crores in FY25, offset by positive cash flow from investing activities of ₹14.00 crores, likely from asset liquidation.
The five-year trend shows accelerating deterioration. Shareholder funds declined from negative ₹2,437.65 crores in FY20 to negative ₹3,060.59 crores in FY25, representing an additional erosion of ₹622.94 crores. Current liabilities increased from ₹2,602.91 crores to ₹3,280.62 crores over the same period, whilst fixed assets shrank from ₹3.26 crores to ₹1.97 crores. The company is effectively in managed liquidation, with no viable path to operational recovery.
Accounting Red Flag: Negative Book Value
With book value per share at negative ₹326.57, Gujarat State Financial Corporation's equity has been completely obliterated. The company's price-to-book ratio of -0.03x is meaningless in valuation terms, as it implies negative intrinsic value. Investors are essentially betting on government intervention or asset recovery rather than any fundamental business value.
Industry Context: State Financial Corporations Under Pressure
Gujarat State Financial Corporation operates in the state-level development finance space, a sector that has faced significant challenges since economic liberalisation. Traditional state financial corporations (SFCs) were established in the 1950s and 1960s to provide long-term finance to small and medium enterprises, but many have struggled to remain relevant in an era of commercial banking expansion and NBFC proliferation.
The company's peer group includes institutions like Housing and Urban Development Corporation (HUDCO), Indian Renewable Energy Development Agency, and IFCI, though these have evolved into more specialised niches. GSFC's failure to adapt or diversify has left it with a legacy loan book that appears largely non-performing, given the minimal interest income relative to interest expenses. The company's institutional holding stands at just 3.23%, with zero foreign institutional investor (FII) or mutual fund participation, reflecting complete abandonment by professional investors.
Over the past year, GSFC has underperformed the finance sector by a staggering 62.20 percentage points, with the stock declining 38.19% whilst the broader finance sector gained 24.01%. The company's beta of 1.50 indicates higher volatility than the market, though this is cold comfort given the unidirectional downward trend. Technical indicators across weekly and monthly timeframes remain bearish, with MACD, RSI, and Bollinger Bands all signalling continued weakness.
Peer Comparison: Bottom of the Barrel
| Company | P/E (TTM) | P/BV | ROE (%) | Debt/Equity | Div Yield |
|---|---|---|---|---|---|
| Guj. State Fin. | NA (Loss Making) | -0.03 | 0.0% | -0.21 | NA |
| HUDCO | 14.08 | 2.17 | 13.11% | 7.03 | 2.66% |
| Indian Renewable | 18.44 | 2.69 | 14.40% | 5.41 | NA |
| CreditAcc. Gram. | 42.02 | 2.85 | 11.49% | 2.81 | NA |
| IFCI | 42.17 | 1.91 | 1.29% | 0.40 | NA |
| Tour. Fin. Corp. | 28.51 | 2.77 | 9.16% | 0.82 | 0.80% |
Gujarat State Financial Corporation occupies the unenviable position of worst performer amongst its peer group across virtually every metric. Whilst peers like HUDCO and Indian Renewable Energy generate return on equity of 13-14%, GSFC posts 0.0% ROE due to negative shareholder funds. The company's negative price-to-book ratio of -0.03x contrasts sharply with peer averages of 2.0-2.8x, reflecting the complete absence of equity value.
Even IFCI, itself a troubled institution with ROE of just 1.29%, maintains positive shareholder funds and trades at a price-to-book ratio of 1.91x. GSFC's debt-to-equity ratio of -0.21 is technically favourable (indicating net cash) but misleading, as the negative equity base renders the metric meaningless. The company pays no dividends and offers no earnings visibility, making it fundamentally uninvestable compared to functional peers.
Valuation Analysis: Negative Intrinsic Value
Traditional valuation methodologies break down completely when applied to Gujarat State Financial Corporation. With negative book value, zero earnings, and negligible operational assets, the company has no discernible intrinsic value. The current market capitalisation of ₹102.00 crores appears to reflect speculative positioning or residual hope for government-backed restructuring rather than any fundamental valuation anchor.
The stock trades at a price-to-book ratio of -0.03x, which is mathematically meaningless given the negative ₹326.57 book value per share. Enterprise value to EBITDA stands at -216.19x, reflecting the negative enterprise value that results from current liabilities exceeding total assets. The company's valuation grade has oscillated between "Risky" and "Attractive" over recent months, though the current "RISKY" designation is the only appropriate classification for a company with completely eroded equity.
From a liquidation value perspective, GSFC's fixed assets of ₹1.97 crores and zero current assets would be entirely consumed by current liabilities of ₹3,280.62 crores, leaving shareholders with nothing. The 83.95% promoter holding (primarily government entities) suggests that any recovery value would accrue to creditors and the state rather than minority shareholders. At ₹11.25 per share, the stock trades just 2.27% above its 52-week low of ₹11.00, with the 52-week high of ₹21.20 now appearing as an aberration rather than a realistic valuation benchmark.
Shareholding Pattern: Government Dominance, Institutional Exodus
| Category | Dec'25 | Sep'25 | Jun'25 | QoQ Change |
|---|---|---|---|---|
| Promoter | 83.95% | 83.95% | 83.95% | 0.00% |
| FII | 0.00% | 0.00% | 0.00% | 0.00% |
| Mutual Funds | 0.00% | 0.00% | 0.00% | 0.00% |
| Insurance | 0.00% | 0.00% | 0.00% | 0.00% |
| Other DII | 3.23% | 5.58% | 5.64% | -2.35% |
| Non-Institutional | 12.82% | 10.47% | 10.41% | +2.35% |
The shareholding pattern reveals a company dominated by government entities with zero institutional investor interest. Promoter holding remains stable at 83.95%, with H.E. The Governor of Gujarat holding 55.09% and Small Industries Development Bank of India (SIDBI) holding 28.41%. The remaining promoter stake is fragmented amongst various public sector banks and insurance companies, each holding negligible percentages.
Most tellingly, foreign institutional investors, mutual funds, and insurance companies maintain zero holdings in GSFC. Other domestic institutional investors (DII) reduced their stake from 5.58% in September 2025 to 3.23% in December 2025, a significant 2.35 percentage point decline that signals continued institutional exit. This reduction was absorbed by non-institutional investors, whose stake increased from 10.47% to 12.82% in the same period, suggesting retail speculation rather than informed institutional accumulation.
The complete absence of professional institutional investors—zero mutual funds, zero FIIs, zero insurance companies—speaks volumes about GSFC's investment merit. With no analyst coverage, no institutional support, and no dividend history, the stock exists in a liquidity vacuum sustained only by government ownership and residual retail trading.
Stock Performance: Unrelenting Decline
| Period | GSFC Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | -2.00% | -1.14% | -0.86% |
| 1 Month | -6.87% | -1.20% | -5.67% |
| 3 Months | -12.59% | -2.19% | -10.40% |
| 6 Months | -20.33% | +2.59% | -22.92% |
| YTD | -4.26% | -3.04% | -1.22% |
| 1 Year | -38.19% | +8.52% | -46.71% |
| 2 Years | -59.82% | +15.47% | -75.29% |
| 3 Years | +64.71% | +36.73% | +27.98% |
Gujarat State Financial Corporation's stock performance reflects unrelenting selling pressure across all meaningful timeframes. Over the past year, the stock has declined 38.19%, underperforming the Sensex by 46.71 percentage points. The two-year return of -59.82% represents a near-total collapse in shareholder value, with the stock underperforming the Sensex by 75.29 percentage points over this period.
Short-term momentum remains decisively negative. The stock has declined 6.87% over the past month (versus Sensex decline of 1.20%), 12.59% over three months (versus Sensex decline of 2.19%), and 20.33% over six months (versus Sensex gain of 2.59%). The year-to-date return of -4.26% marginally underperforms the Sensex decline of 3.04%, though this provides no comfort given the stock's proximity to 52-week lows.
The three-year return of +64.71% appears anomalous in the context of recent performance, likely reflecting a speculative spike from depressed levels rather than fundamental improvement. The stock's risk-adjusted return of -0.91 over the past year, combined with volatility of 41.77%, places it firmly in "HIGH RISK LOW RETURN" territory. With the stock trading below all moving averages (5-day, 20-day, 50-day, 100-day, and 200-day), technical indicators offer no support for a reversal.
Investment Thesis: Speculative Wreckage
Gujarat State Financial Corporation fails every fundamental test of investment quality. The company's Mojo Score of 17 out of 100 reflects "STRONG SELL" status, driven by a confluence of negative factors: bearish technical trend, flat financial performance, negative book value, weak long-term fundamental strength, and consistent market underperformance. The company's quality grade stands at "BELOW AVERAGE," reflecting sustained operational failure and capital structure collapse.
The valuation assessment of "RISKY" is perhaps the most accurate descriptor, as the company possesses no conventional valuation metrics. Financial trend analysis shows a "FLAT" trajectory in Q3 FY26, though this flatness represents stagnation at catastrophically negative levels rather than stability. Technical trend indicators across weekly and monthly timeframes remain bearish, with MACD, RSI, and moving averages all signalling continued downside pressure.
The company's five-year sales growth of -184.21% and EBIT growth of 10.31% present a contradictory picture, though both metrics are rendered meaningless by the company's negative capital base and inability to service interest obligations. With institutional holdings at just 3.23% and declining, professional investors have rendered their verdict: GSFC is uninvestable.
Key Strengths & Risk Factors
✓ Government Backing: 83.95% promoter holding by Gujarat Government and SIDBI provides implicit support and reduces likelihood of formal bankruptcy.
✓ Zero Debt Company: No long-term debt on balance sheet eliminates refinancing risk, though this is offset by massive current liabilities.
✓ Stable Other Income: Quarterly other income of ₹4.00-4.15 crores provides minimal cash flow cushion against interest obligations.
✓ Minimal Capital Requirements: With operations effectively ceased, the company requires no growth capital or expansion investment.
⚠️ Negative Shareholder Funds: Shareholder deficit of ₹3,060.59 crores represents complete equity erosion with no path to recovery.
⚠️ Chronic Loss Making: Quarterly losses of ₹31-32 crores have persisted for years with no improvement trajectory.
⚠️ Unsustainable Interest Burden: Quarterly interest of ₹35.65 crores vastly exceeds operational capacity, with coverage ratio of just 0.10x.
⚠️ Zero Institutional Interest: Complete absence of FII, mutual fund, and insurance holdings signals professional investor abandonment.
⚠️ Revenue Collapse: Net sales declined to zero in Q3 FY26, indicating complete cessation of lending or operational activities.
⚠️ Negative Book Value: Book value per share of ₹-326.57 eliminates any residual equity claim for shareholders.
⚠️ Technical Breakdown: Stock trading below all moving averages with bearish indicators across timeframes.
Outlook: Managed Decline with No Recovery Path
Positive Catalysts (None Identified)
Government Restructuring: Potential state-backed debt restructuring could provide technical relief, though this would benefit creditors rather than equity holders.
Asset Recovery: Any recovery from legacy loan book could marginally reduce interest burden, though prospects appear minimal given current trajectory.
Red Flags (Multiple Critical Issues)
Continued Equity Erosion: Quarterly losses of ₹31-32 crores will deepen shareholder deficit by another ₹125+ crores annually.
Potential Delisting: Continued losses and regulatory scrutiny could lead to exchange-mandated delisting.
Creditor Action: Current liabilities of ₹3,280 crores represent mounting pressure that could trigger formal insolvency proceedings.
Zero Operational Recovery: With revenue at zero and no business model, the company has no path to organic turnaround.
Gujarat State Financial Corporation faces an irreversible decline trajectory. With negative shareholder funds exceeding ₹3,000 crores, quarterly losses matching its entire market capitalisation, and zero revenue generation, the company exists as a shell institution sustained only by government ownership. The absence of any restructuring announcement, operational revival plan, or capital infusion suggests that stakeholders have accepted managed decline as the only viable outcome.
For existing shareholders, the outlook is bleak. The stock trades just 2.27% above its 52-week low with no technical support levels in sight. Institutional investors have completely exited, leaving only retail speculators and promoter holdings. Any recovery scenario would require massive capital injection (likely exceeding ₹3,000 crores to restore positive equity), comprehensive debt restructuring, and complete operational overhaul—none of which appear remotely feasible.
The Verdict: Avoid at All Costs
Score: 17/100
For Fresh Investors: Gujarat State Financial Corporation represents a value trap with no investment merit. With negative book value of ₹-326.57 per share, quarterly losses of ₹31.93 crores, and zero operational revenue, the company has no intrinsic value. Fresh investment would be speculative gambling rather than investing. Complete avoidance is the only rational strategy.
For Existing Holders: Exit immediately at any available price. The stock has declined 38.19% over the past year and 59.82% over two years, with no recovery catalyst in sight. Continued holding will likely result in further capital erosion as quarterly losses persist. The company's negative shareholder funds and unsustainable interest burden make equity recovery impossible without massive government intervention that would dilute existing shareholders to zero.
Fair Value Estimate: ₹0.00 (100% downside). The company's negative book value and complete absence of operational viability render equity worthless. Current market price of ₹11.25 reflects residual speculation rather than fundamental value.
Note: Capital Employed figures are negative due to shareholder deficit, rendering ROCE calculations meaningless for Gujarat State Financial Corporation.
⚠️ 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. Gujarat State Financial Corporation presents extreme risk characteristics that make it unsuitable for most investors.
