Jet Freight Logistics Q2 FY26: Revenue Slump and Profit Volatility Raise Serious Concerns

The September 2025 quarter results reveal a company grappling with significant revenue volatility, as net sales plummeted 30.02% sequentially to ₹83.78 crores—the lowest quarterly revenue recorded in recent periods. This sharp contraction follows a modest 4.53% growth in the previous quarter, highlighting the unpredictable nature of the freight and logistics business environment. The year-on-year decline of 4.22% further underscores the challenges facing the company in a sector that has seen mixed performance across peers.

Financial Performance: Margin Resilience Amid Revenue Turbulence

Despite the sharp revenue decline, Jet Freight Logistics demonstrated some operational resilience in Q2 FY26. Operating profit before depreciation, interest, tax, and other income (PBDIT excluding OI) stood at ₹2.80 crores, marking the lowest quarterly figure but translating to an improved operating margin of 3.34%—up 79 basis points from 2.55% in the previous quarter. This margin expansion suggests effective cost management in a challenging environment, though the absolute profit levels remain concerning.

The company's profit after tax margin of 1.04% for Q2 FY26 contracted from 1.49% in the preceding quarter, reflecting the impact of higher interest costs and tax provisions. Interest expenses remained elevated at ₹1.52 crores, whilst the effective tax rate surged to 34.09% from 25.21% in Q1 FY26. The tax rate volatility—which has ranged from 12.46% to 62.92% across recent quarters—adds another layer of unpredictability to earnings.

On a half-yearly basis for H1 FY26, the company reported combined revenues of ₹203.50 crores with net profits totalling ₹2.65 crores, representing modest improvements over the corresponding period. However, the extreme quarter-to-quarter swings in both top-line and bottom-line performance raise questions about the sustainability and predictability of the business model.

Operational Challenges: Weak Return Ratios Signal Structural Issues

The company's return on equity (ROE) stands at a concerning 4.26% on average, with the latest reading at 5.80%—significantly below industry standards for a healthy logistics business. This low ROE indicates inefficient capital deployment and limited value creation for shareholders. The return on capital employed (ROCE) of 7.18% average, with a latest figure of 10.23%, similarly reflects suboptimal asset utilisation.

These weak profitability metrics are compounded by a challenging debt profile. The company's debt-to-equity ratio of 0.81 and debt-to-EBITDA ratio of 7.21 indicate elevated leverage relative to earnings generation capacity. With interest coverage (EBIT to interest) at just 1.16 times, the company has limited cushion to absorb earnings volatility or rising interest rates. Long-term debt stood at ₹14.92 crores as of March 2025, whilst current liabilities ballooned to ₹97.27 crores, creating potential working capital pressures.

Balance Sheet Quality: Working Capital Strain Evident

The balance sheet reveals mounting working capital pressures. Trade payables declined sharply to ₹25.76 crores in FY25 from ₹46.32 crores in FY24, whilst other current liabilities surged to ₹23.06 crores from ₹7.75 crores. This shift in liability composition, combined with current assets of ₹111.63 crores, suggests potential cash flow challenges. The cash flow statement for FY25 shows negative operating cash flow of ₹2.00 crores, driven by adverse working capital changes of ₹22.00 crores.

Shareholder funds increased modestly to ₹64.45 crores from ₹60.85 crores, supported by reserves and surplus of ₹41.25 crores. However, the book value per share of ₹13.89 remains only marginally above the current market price of ₹12.50, offering limited downside protection. Fixed assets have been declining steadily, from ₹26.31 crores to ₹25.39 crores, suggesting minimal capacity expansion or capital investment.

Industry Context: Underperforming in a Mixed Sector

The transport services sector has delivered mixed results, with Jet Freight Logistics lagging behind several peers. The company's one-year stock return of -16.11% compares unfavourably to the sector average decline of -12.96%, resulting in underperformance of 3.15 percentage points. More concerningly, the three-year return of -36.23% stands in stark contrast to the Sensex's 40.77% gain over the same period, representing a staggering negative alpha of 77 percentage points.

The freight forwarding and logistics industry faces headwinds from fluctuating global trade volumes, competitive pricing pressures, and rising operational costs. Jet Freight's business model—managing over 150 tonnes of air cargo daily with leading global airlines—exposes it to airline capacity constraints and volatile freight rates. The company's specialisation in perishable, time-sensitive, and general cargo requires significant working capital to manage inventory and receivables, contributing to the cash flow pressures evident in recent quarters.

Jet Freight trades at a price-to-earnings ratio of 13.01x, significantly below the industry average P/E of 36x, reflecting market scepticism about earnings quality and growth prospects. The company's price-to-book value of 0.90x suggests the market values the business below its accounting net worth. Whilst peers like Shreeji Translog and Cargotrans Maritime command higher valuations supported by superior ROE of around 20%, Jet Freight's 4.26% ROE justifies its valuation discount.

Valuation Analysis: Discount Reflects Fundamental Weakness

At the current price of ₹12.50, Jet Freight Logistics trades at attractive valuation multiples on paper. The enterprise value-to-EBITDA ratio of 8.02x and EV-to-sales of 0.26x appear reasonable for a logistics business. However, these metrics must be evaluated in the context of negative financial trends, weak profitability, and high leverage. The PEG ratio of 0.61x suggests potential value, but this is undermined by the negative five-year sales growth rate.

The stock has declined 38.12% from its 52-week high of ₹20.20, currently trading just 19.62% above its 52-week low of ₹10.45. This proximity to multi-month lows reflects deteriorating investor sentiment. The proprietary valuation grade has improved to "Very Attractive" from "Attractive," but this rating appears to be more a function of price decline than fundamental improvement. Year-to-date, the stock has plummeted 32.40% whilst the Sensex gained 8.02%, resulting in a negative alpha of 40.42 percentage points.

Shareholding Pattern: Promoter Stake Decline Raises Governance Questions

The shareholding structure reveals a dramatic reduction in promoter holding, which declined from 26.16% in September 2024 to just 12.27% by December 2024—a reduction of 13.89 percentage points in a single quarter. The promoter stake has remained stable at 12.27% through March and June 2025, but this low level of promoter ownership in a micro-cap stock raises concerns about management commitment and alignment with minority shareholders.

The key promoters include Richard Francis Theknath (23.38% of promoter holding), Dax Francis Theknath (20.73%), and Agnes Francis Theknath (6.81%). Institutional interest remains negligible, with zero mutual fund holdings and minimal foreign institutional investor participation. The absence of institutional investors—typically a source of stability and governance oversight—further increases the risk profile for retail shareholders. Non-institutional holdings dominate at approximately 49%, suggesting a largely retail shareholder base vulnerable to liquidity concerns.

Stock Performance: Consistent Underperformance Across All Timeframes

Jet Freight's stock performance has been dismal across virtually all measured timeframes. The stock trades below all key moving averages—5-day (₹12.75), 20-day (₹12.89), 50-day (₹13.24), 100-day (₹13.65), and 200-day (₹13.64)—indicating sustained downward momentum. The technical trend classification has deteriorated to "Bearish" as of September 22, 2025, with multiple technical indicators including MACD, RSI, Bollinger Bands, and KST all flashing bearish signals.

The stock's beta of 1.50 indicates significantly higher volatility than the broader market, whilst the negative risk-adjusted return of -0.33 over one year classifies it as "HIGH RISK LOW RETURN." With volatility at 48.82%—nearly four times the Sensex's 12.49%—the stock presents substantial downside risk without commensurate upside potential. The three-year cumulative underperformance of 77 percentage points versus the Sensex represents wealth destruction on a massive scale for long-term holders.

Investment Thesis: Multiple Red Flags Outweigh Valuation Appeal

The proprietary Mojo score of 17 out of 100 places Jet Freight Logistics firmly in "STRONG SELL" territory, with the recommendation to "strongly consider selling" or "exit recommended." This score reflects a confluence of negative factors: bearish technical trend, negative financial trend, weak long-term fundamental strength with -4.71% sales CAGR, and consistent underperformance against benchmarks. The score has deteriorated from 28 in May 2025 and 53 in December 2024, indicating accelerating fundamental weakness.

Whilst the valuation appears attractive on surface metrics, this represents a classic value trap scenario where low multiples reflect genuine business deterioration rather than market inefficiency. The company's inability to generate consistent profits, negative cash flows, elevated leverage, and shrinking promoter stake all point to structural challenges that are unlikely to resolve in the near term.

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