The quarter's performance reflects a mixed narrative for the micro-cap NBFC. Whilst sequential profit growth appears encouraging on the surface, the broader picture reveals concerning trends including a 6.06% year-on-year profit decline, extreme margin volatility, and a valuation grade classified as "Very Expensive" with a P/E ratio of 35x—significantly above the industry average of 24x. The company's proprietary Mojo Score stands at a worrying 23 out of 100, placing it firmly in "Strong Sell" territory and signalling fundamental concerns that extend beyond quarterly fluctuations.
Financial Performance: Margin Expansion Amid Revenue Volatility
In Q2 FY26, Jindal Capital generated net sales of ₹0.97 crores, representing a robust 25.97% sequential increase from ₹0.77 crores in Q1 FY26 and a 42.65% year-on-year improvement from ₹0.68 crores in Q2 FY25. However, this growth masks underlying instability—the company's quarterly revenue has oscillated wildly over the past seven quarters, ranging from a low of ₹0.59 crores in Mar'24 to a high of ₹1.25 crores in Dec'24, reflecting an absence of consistent business momentum.
| Quarter | Net Sales (₹ Cr) | QoQ Growth | Net Profit (₹ Cr) | QoQ Growth | PAT Margin |
|---|---|---|---|---|---|
| Sep'25 | 0.97 | +25.97% | 0.31 | +55.00% | 31.96% |
| Jun'25 | 0.77 | 0.00% | 0.20 | ▲ From Loss | 25.97% |
| Mar'25 | 0.77 | -38.40% | -0.22 | ▼ Loss | -28.57% |
| Dec'24 | 1.25 | +83.82% | 0.50 | +51.52% | 40.00% |
| Sep'24 | 0.68 | -37.61% | 0.33 | -58.23% | 48.53% |
| Jun'24 | 1.09 | +84.75% | 0.79 | +364.71% | 72.48% |
| Mar'24 | 0.59 | — | 0.17 | — | 28.81% |
Operating profit before depreciation, interest, and tax (excluding other income) reached ₹0.64 crores in Q2 FY26, translating to an operating margin of 65.98%—a substantial improvement from 46.75% in the preceding quarter. This margin expansion, whilst impressive on paper, reflects the extreme variability that has characterised Jindal Capital's operations. The operating margin ranged from a mere 15.25% in Mar'24 to an extraordinary 82.57% in Jun'24, suggesting inconsistent cost structures and revenue quality rather than sustainable operational efficiency.
Employee costs declined to ₹0.20 crores in Q2 FY26 from ₹0.34 crores in Q1 FY26, contributing to margin expansion. Interest expenses increased to ₹0.24 crores from ₹0.17 crores sequentially, reflecting higher borrowing costs. The company reported a tax expense of ₹0.10 crores at an effective rate of 24.39%, a stark contrast to the zero tax liability in Q1 FY26 and the unusual 188.00% tax rate in Mar'25 when the company reported a loss.
Operational Challenges: Weak Returns and Structural Concerns
Jindal Capital's return on equity (ROE) stands at 7.12% for the latest period, significantly below the double-digit thresholds typically expected from well-managed NBFCs. This weak capital efficiency reflects the company's struggle to generate meaningful returns for shareholders despite elevated leverage. The average ROE over a longer period is 7.04%, underscoring persistent profitability challenges. For context, higher ROE values indicate superior capital efficiency and profitability—Jindal Capital's single-digit returns flag fundamental concerns about the business model's viability and competitive positioning.
The company's balance sheet reveals modest shareholder funds of ₹11.10 crores as of Mar'25, comprising share capital of ₹7.21 crores and reserves of ₹3.89 crores. Current liabilities have surged to ₹9.27 crores from ₹5.72 crores in Mar'24, indicating growing operational pressures. Fixed assets remain minimal at ₹0.06 crores, whilst current assets stand at ₹3.25 crores, up from ₹1.28 crores year-on-year. The company operates with zero long-term debt, but the rise in current liabilities suggests reliance on short-term funding sources.
Critical Concern: Eroding Profitability Quality
The company's 5-year sales growth rate stands at a concerning -20.74%, indicating sustained revenue contraction over the medium term. Whilst 5-year EBIT growth of 23.56% appears positive, this metric contrasts sharply with the sales decline, suggesting unsustainable margin expansion or accounting adjustments rather than organic business growth. The financial trend classification of "Flat" for Q2 FY26 reflects the absence of clear positive momentum.
Valuation Analysis: Premium Without Justification
Trading at a P/E ratio of 35x compared to the industry average of 24x, Jindal Capital commands a significant valuation premium that appears unjustified given its operational performance. The price-to-book value ratio of 2.47x suggests the market is pricing in growth expectations that the company has consistently failed to deliver. The valuation grade of "Very Expensive" reflects this disconnect between market price and fundamental value.
| Valuation Metric | Jindal Capital | Industry Avg | Assessment |
|---|---|---|---|
| P/E Ratio (TTM) | 35.00x | 24.00x | 46% Premium |
| Price to Book Value | 2.47x | — | Elevated |
| EV/EBITDA | 15.65x | — | Above Average |
| EV/Sales | 8.57x | — | High Multiple |
The stock's 52-week range of ₹34.65 to ₹56.75 illustrates significant volatility, with the current price of ₹38.00 sitting 33.04% below the yearly high and just 9.67% above the low. This price action, combined with weak fundamentals, suggests limited upside potential and substantial downside risk. The absence of dividend yield further diminishes the investment case for income-focused investors.
Peer Comparison: Lagging on Key Metrics
Within the NBFC peer group, Jindal Capital's positioning reveals both relative strengths and weaknesses. Whilst the company maintains a positive ROE of 7.04%—superior to several peers reporting zero or negative returns—the absolute level remains underwhelming for the sector. The P/E ratio of 34.67x sits below extreme outliers like Apex Capital & Finance (71.04x) but above Navigant Corporation (16.53x), suggesting middling market confidence.
| Company | Market Cap (₹ Cr) | P/E (TTM) | P/BV | ROE (%) | Debt/Equity |
|---|---|---|---|---|---|
| Jindal Capital | 28.00 | 34.67x | 2.47x | 7.04% | 0.70x |
| IndiaNivesh | — | NA (Loss Making) | -0.67x | 0.00% | -3.25x |
| MPIL Corporation | — | NA (Loss Making) | 2.07x | 0.00% | -0.27x |
| Navigant Corp. | — | 16.53x | — | — | — |
| Apex Cap. & Fin. | — | 71.04x | — | — | — |
| Purshottam Inves | — | NA (Loss Making) | 0.53x | 8.48% | 0.34x |
However, Jindal Capital's P/BV ratio of 2.47x significantly exceeds the peer average of approximately 0.6x, indicating the market is pricing in growth expectations that peer fundamentals do not support. The debt-to-equity ratio of 0.70x represents moderate leverage—higher than Purshottam Investments (0.34x) but within manageable limits for an NBFC. The absence of institutional holdings (0.0%) signals a lack of professional investor confidence, a red flag for quality-conscious investors.
Shareholding Pattern: Stable but Concentrated
Promoter holdings have remained unchanged at 71.34% across the last five quarters, indicating ownership stability but also raising concerns about limited public float. The absence of foreign institutional investors (FIIs), mutual funds, insurance companies, and other domestic institutional investors (DIIs) across all tracked quarters underscores the stock's lack of institutional appeal. Non-institutional investors hold the remaining 28.66%, with no meaningful changes in recent quarters.
| Category | Sep'25 | Jun'25 | Mar'25 | Dec'24 | QoQ Change |
|---|---|---|---|---|---|
| Promoter | 71.34% | 71.34% | 71.34% | 71.34% | 0.00% |
| FII | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
| Mutual Funds | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
| Insurance | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
| Other DII | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
| Non-Institutional | 28.66% | 28.66% | 28.66% | 28.66% | 0.00% |
The promoter group comprises seven entities, with CMV Informatics Private Limited holding the largest stake at 13.07%, followed by Manjula Aggarwal (12.49%) and Sadhu Ram Aggarwal (9.71%). Positively, there is no promoter pledging, eliminating one potential risk factor. However, the complete absence of institutional participation suggests professional investors view the company as lacking the scale, governance standards, or growth visibility required for institutional portfolios.
Stock Performance: Sustained Underperformance
Jindal Capital's stock has delivered deeply disappointing returns across most timeframes, significantly underperforming both the broader market and its sector peers. Over the past year, the stock declined 22.45% compared to the Sensex's gain of 9.50%, resulting in negative alpha of 31.95 percentage points. The underperformance versus the NBFC sector is even more pronounced, with the sector delivering 25.60% returns whilst Jindal Capital lagged by 48.05 percentage points.
| Period | Stock Return | Sensex Return | Alpha | Assessment |
|---|---|---|---|---|
| 1 Week | 1.25% | 1.69% | -0.44% | Slight Lag |
| 1 Month | -10.31% | 1.19% | -11.50% | Sharp Decline |
| 3 Months | -0.47% | 5.40% | -5.87% | Underperformance |
| 6 Months | -9.65% | 3.18% | -12.83% | Weak |
| YTD | -12.08% | 8.72% | -20.80% | Poor |
| 1 Year | -22.45% | 9.50% | -31.95% | Very Weak |
| 3 Years | 51.09% | 37.57% | +13.52% | Outperformance |
| 5 Years | 639.30% | 93.28% | +546.02% | Exceptional |
The recent price action paints a concerning picture. The stock trades below all key moving averages—5-day (₹37.53), 20-day (₹39.96), 50-day (₹41.49), 100-day (₹40.78), and 200-day (₹41.59)—indicating sustained selling pressure and negative technical momentum. The technical trend classification of "Mildly Bearish" reflects this weakness, with the stock having transitioned from "Bearish" to "Mildly Bearish" on November 17, 2025, at ₹38.00.
Interestingly, longer-term returns tell a different story. Over three years, the stock gained 51.09% versus the Sensex's 37.57%, delivering positive alpha of 13.52 percentage points. The five-year return of 639.30% significantly outpaced the Sensex's 93.28%, suggesting historical periods of strong performance. However, these gains appear to have peaked, with recent trends indicating a reversal of fortune as fundamental challenges have caught up with valuation.
"With a beta of 1.50, Jindal Capital exhibits 50% higher volatility than the broader market—amplifying both gains and losses in a stock already burdened by weak fundamentals and excessive valuation."
Investment Thesis: Multiple Red Flags Converge
The investment case for Jindal Capital faces significant headwinds across multiple dimensions. The company's Mojo Score of 23 out of 100 places it in the "Strong Sell" category, reflecting poor performance across valuation, quality, financial trends, and technical indicators. The quality grade of "Below Average" underscores long-term structural weaknesses, with the company failing to meet minimum standards for institutional consideration.
The financial trend classification of "Flat" for Q2 FY26 indicates the absence of sustained positive momentum despite the sequential profit improvement. The technical trend of "Mildly Bearish" combines with the stock trading below all major moving averages to create an unfavourable risk-reward setup. The risk-adjusted return of -0.54 over the past year, coupled with high volatility of 41.50%, categorises Jindal Capital as "High Risk Low Return"—the worst possible combination for investors.
Key Strengths & Risk Factors
KEY STRENGTHS ✓
- Sequential Profit Recovery: Net profit improved 55.00% QoQ to ₹0.31 crores, indicating short-term operational stabilisation.
- Strong Revenue Growth (YoY): Q2 FY26 sales rose 42.65% year-on-year, suggesting demand resilience.
- Zero Promoter Pledging: Eliminates governance concerns related to pledged shares and forced selling risks.
- Debt-Free Long-Term Structure: Zero long-term debt provides financial flexibility and reduces interest burden risks.
- Historical Long-Term Returns: Five-year return of 639.30% demonstrates past value creation capability.
KEY CONCERNS ⚠
- Weak ROE of 7.12%: Significantly below industry standards, indicating poor capital efficiency and profitability.
- Extreme Revenue Volatility: Quarterly sales ranging from ₹0.59 crores to ₹1.25 crores signal business instability.
- Negative 5-Year Sales Growth: Compound annual decline of 20.74% reflects sustained revenue contraction.
- Excessive Valuation: P/E of 35x (46% premium to industry) unjustified by fundamentals; classified "Very Expensive".
- Zero Institutional Holdings: Complete absence of FII, MF, insurance participation signals quality concerns.
- Recent Underperformance: Down 22.45% over one year vs Sensex +9.50%; lagging sector by 48.05 percentage points.
- Mildly Bearish Technicals: Trading below all key moving averages with negative momentum indicators.
Outlook: Critical Monitoring Points
POSITIVE CATALYSTS
- Sustained Revenue Stability: Consistent quarterly sales above ₹1.00 crore for three consecutive quarters would signal business stabilisation.
- ROE Improvement: Achieving double-digit ROE (above 12%) would indicate improving capital efficiency and profitability.
- Institutional Interest: Entry of mutual funds or FIIs would validate quality improvements and enhance liquidity.
- Margin Consistency: Operating margins stabilising in the 50-60% range would reduce earnings volatility concerns.
RED FLAGS
- Return to Quarterly Losses: Any quarter reporting negative PAT would reinforce fundamental weakness concerns.
- Further Current Liability Surge: Continued increase beyond ₹10 crores would signal working capital stress and liquidity pressures.
- Promoter Stake Reduction: Any decline in the stable 71.34% holding would raise governance and confidence concerns.
- Technical Breakdown: Decisive breach below ₹34.65 (52-week low) would trigger further selling and test lower support levels.
The Verdict: Avoid This Value Trap
Score: 23/100
For Fresh Investors: Avoid initiating positions. The combination of weak fundamentals (7.12% ROE, negative 5-year sales growth), excessive valuation (P/E 35x vs industry 24x), zero institutional participation, and bearish technical trends creates an unfavourable risk-reward profile. The micro-cap nature amplifies liquidity risks, whilst the absence of clear growth catalysts provides no margin of safety at current prices.
For Existing Holders: Consider exiting on any technical bounce towards ₹40-42 levels. The stock's classification as "High Risk Low Return" with a Mojo Score of just 23/100 suggests limited upside potential and substantial downside risk. Whilst the sequential profit improvement provides temporary relief, the broader trend of revenue volatility, weak returns, and deteriorating technical momentum outweighs short-term positives. Reallocate capital to higher-quality opportunities with stronger fundamentals and institutional backing.
Fair Value Estimate: ₹28.00-30.00 (26-32% downside from current ₹38.00), based on normalised P/E of 20-22x applied to volatile earnings and adjusted for quality concerns.
Note- ROCE= (EBIT - Other income)/(Capital Employed - Cash - Current Investments)
⚠️ 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. Past performance is not indicative of future results. Investments in micro-cap stocks carry substantially higher risks including limited liquidity, extreme volatility, and potential for total capital loss.
