The quarter-on-quarter deterioration reflects deepening operational challenges for this Mumbai-based company, which has been grappling with sustained losses since Q1 FY25. With net sales declining 10.67% sequentially to ₹0.67 crores and operating margins plunging to -61.19%, the company's financial trajectory remains concerning. The year-on-year comparison shows a marginal 2.90% decline in revenue, underscoring stagnant top-line growth amid mounting operational pressures.
Kemp & Co's operating profit before depreciation, interest, and tax (PBDIT) excluding other income stood at ₹-0.41 crores in Q2 FY26, representing the worst performance in the trailing seven quarters. Employee costs, which accounted for ₹0.36 crores during the quarter, continue to weigh heavily on the company's narrow revenue base, creating a structural profitability challenge that management has yet to address effectively.
Financial Performance: Revenue Decline Amplifies Loss-Making Trajectory
| Quarter | Net Sales (₹ Cr) | QoQ Change | Net Profit (₹ Cr) | QoQ Change | Operating Margin |
|---|---|---|---|---|---|
| Sep'25 | 0.67 | -10.67% | -0.28 | -12.00% | -61.19% |
| Jun'25 | 0.75 | -1.32% | -0.25 | +32.43% | -41.33% |
| Mar'25 | 0.76 | +1.33% | -0.37 | -68.18% | -34.21% |
| Dec'24 | 0.75 | +8.70% | -0.22 | +37.50% | -41.33% |
| Sep'24 | 0.69 | -2.82% | -0.16 | +54.29% | -52.17% |
| Jun'24 | 0.71 | -4.05% | -0.35 | -259.09% | -70.42% |
| Mar'24 | 0.74 | — | 0.22 | — | 43.24% |
The quarterly trend analysis reveals a company trapped in a cycle of operational inefficiency. After posting a profitable quarter in March 2024 with net profit of ₹0.22 crores and a healthy 43.24% operating margin, Kemp & Co has reported consecutive losses across the subsequent five quarters. The deterioration accelerated in Q2 FY26, with revenue declining 10.67% quarter-on-quarter to ₹0.67 crores whilst operating margins collapsed to -61.19%, the worst level recorded in recent history.
On a year-on-year basis, net sales in Q2 FY26 declined 2.90% compared to ₹0.69 crores in Q2 FY24, whilst the net loss expanded from ₹0.16 crores to ₹0.28 crores, representing a 75.00% deterioration. The profit after tax margin stood at -41.79% in Q2 FY26, significantly worse than the -23.19% margin recorded a year earlier, highlighting the company's inability to control costs relative to its shrinking revenue base.
Employee costs of ₹0.36 crores in Q2 FY26 represented 53.73% of total revenue, creating an unsustainable cost structure that management has failed to rationalise despite the prolonged period of losses. The operating profit before depreciation, interest, and tax (excluding other income) stood at ₹-0.41 crores, the deepest loss in the trailing seven quarters, indicating that core business operations remain fundamentally unprofitable.
Operational Challenges: Weak Returns and Deteriorating Capital Efficiency
Kemp & Co's operational metrics paint a picture of a company struggling with fundamental business viability. The return on equity (ROE) stood at -0.77% in the latest quarter, reflecting the company's inability to generate positive returns for shareholders. The average ROE over the assessment period was a meagre 0.18%, placing the company among the weakest performers in terms of capital efficiency. Higher ROE typically indicates better capital efficiency and profitability; however, Kemp & Co's negative and near-zero returns underscore serious concerns about the company's ability to deploy shareholder capital productively.
The return on capital employed (ROCE) tells a similar story, with the latest figure at -1.17% and an average of -0.63% over the evaluation period. This metric, which measures how efficiently a company generates profits from its capital base, highlights the company's persistent struggle to create value from its invested capital. The negative ROCE indicates that the company is destroying value rather than creating it, a critical red flag for potential investors.
Critical Concern: Structural Profitability Crisis
Kemp & Co faces a fundamental business model challenge. With employee costs consuming over 50% of revenue and operating margins deeply negative at -61.19%, the company's current operations are unsustainable. The five consecutive quarters of losses since March 2024, combined with stagnant revenue growth of just 2.09% over five years, suggest that management has yet to identify a viable path to profitability. The company's balance sheet shows shareholder funds declining from ₹211.80 crores in March 2024 to ₹129.54 crores in March 2025, a 38.84% erosion in book value that reflects the cumulative impact of sustained losses.
The company's balance sheet reveals a significant shift in asset composition, with investments declining from ₹223.47 crores in March 2024 to ₹126.70 crores in March 2025, a reduction of ₹96.77 crores. This 43.30% contraction in the investment portfolio suggests potential asset liquidation to fund operating losses, raising questions about the sustainability of the current business model. Current assets also declined from ₹3.46 crores to ₹2.38 crores during the same period, further constraining operational flexibility.
The Liquidity Question: Cash Flow Concerns Mount
Kemp & Co's cash flow statement for FY25 reveals troubling trends in the company's ability to generate cash from operations. The company reported negative operating cash flow of ₹1.00 crore in FY25, following negative operating cash flow of ₹2.00 crores in FY24. This persistent inability to generate positive cash flow from core business activities, despite relatively low revenue levels, underscores the fundamental operational challenges facing the company.
To offset the negative operating cash flow, the company generated ₹1.00 crore from investing activities in FY25, likely through the liquidation of investments as evidenced by the significant decline in the investment portfolio on the balance sheet. This pattern of funding operating losses through asset sales is not sustainable in the long term and raises serious questions about the company's strategic direction and management's ability to turn around the business.
Five-Year Growth Trajectory: Stagnation Across Metrics
Over the past five years, Kemp & Co has demonstrated minimal growth, with sales expanding at a compound annual growth rate of just 2.09%. More concerning, the company's EBIT (earnings before interest and tax) has contracted at a rate of -15.53% annually over the same period, indicating deteriorating operational performance. This combination of stagnant revenue growth and declining profitability suggests a business model under severe stress, with no clear catalysts for improvement on the horizon.
Industry Context: Underperforming Within a Weak Peer Group
Within the diversified commercial services sector, Kemp & Co occupies a precarious position. The company's ROE of 0.18% lags significantly behind peers such as Coral India Finance & Investment Ltd. (10.78% ROE) and Ruchi Infrastructure Ltd. (5.84% ROE). Even amongst a peer group characterised by mixed performance, Kemp & Co stands out for its inability to generate meaningful returns on equity capital.
| Company | P/E (TTM) | P/BV | ROE (%) | Debt to Equity |
|---|---|---|---|---|
| Kemp & Co | NA (Loss Making) | 1.08 | 0.18 | 0.00 |
| Ruchi Infrastructure | 21.58 | 0.87 | 5.84 | 0.39 |
| Coral India Finance | 10.77 | 0.74 | 10.78 | 0.00 |
| MILGREY FIN.&INV | 242.83 | 4.47 | 0.00 | 0.85 |
| Droneacharya Aerial | NA (Loss Making) | 1.86 | 4.13 | -0.05 |
| TCI Industries | NA (Loss Making) | 9.90 | 0.00 | 0.14 |
The peer comparison reveals that whilst Kemp & Co maintains zero debt (a positive factor), this conservative balance sheet structure has not translated into operational success. The company's price-to-book ratio of 1.08x suggests the market is pricing the stock close to its book value, though given the ongoing erosion of shareholder funds through sustained losses, even this valuation may prove optimistic if the company cannot return to profitability.
Over the past year, Kemp & Co's shares have declined 25.14%, underperforming the diversified commercial services sector, which fell 23.20% during the same period. This 1.94 percentage point underperformance, whilst modest, reflects investor concerns about the company's specific operational challenges beyond broader sector weakness.
Valuation Analysis: Risky Classification Reflects Fundamental Concerns
Kemp & Co's valuation metrics underscore the market's scepticism about the company's prospects. With a price-to-earnings ratio that is not applicable due to loss-making operations, the primary valuation reference point becomes the price-to-book ratio of 1.08x. This suggests the market is valuing the company at approximately its net asset value, though the ongoing destruction of shareholder value through quarterly losses raises questions about whether even this valuation is justified.
The company's enterprise value to sales ratio of 47.52x appears elevated, though this metric is distorted by the company's minimal revenue base of approximately ₹3.00 crores annually. More telling is the negative EV/EBITDA of -113.06x and negative EV/EBIT of -106.21x, both reflecting the company's loss-making status and the market's difficulty in assigning a meaningful valuation to a business with no clear path to profitability.
The company's valuation has been classified as "RISKY" since April 2023, a designation that reflects the fundamental uncertainties surrounding the business model and profitability outlook. With the stock trading at ₹1,300.00 as of November 7, 2025, down 32.27% from its 52-week high of ₹1,919.30, the market has clearly repriced the equity to reflect deteriorating fundamentals and the absence of near-term catalysts for improvement.
Shareholding: Stable Promoter Base Provides Limited Comfort
| Quarter | Promoter (%) | QoQ Change | FII (%) | MF (%) | Other DII (%) | Non-Inst (%) |
|---|---|---|---|---|---|---|
| Sep'25 | 74.71 | 0.00 | 0.00 | 0.00 | 0.09 | 25.21 |
| Jun'25 | 74.71 | 0.00 | 0.00 | 0.00 | 0.09 | 25.21 |
| Mar'25 | 74.71 | 0.00 | 0.00 | 0.00 | 0.09 | 25.21 |
| Dec'24 | 74.71 | +0.56 | 0.00 | 0.00 | 0.09 | 25.21 |
| Sep'24 | 74.15 | — | 0.00 | 0.00 | 0.09 | 25.76 |
Promoter holding in Kemp & Co has remained stable at 74.71% over the past three quarters, following a modest increase of 0.56 percentage points in December 2024. The primary promoter entities include Vibhuti Investments Company Limited (68.12%), D G P Securities Limited (6.55%), and Alcon Finance & Investments Limited (0.03%). Importantly, there is no promoter pledging, which eliminates one potential risk factor for investors.
However, the complete absence of institutional investor interest is notable and concerning. Foreign institutional investors (FIIs), mutual funds, and insurance companies collectively hold 0.00% of the company's equity, whilst other domestic institutional investors maintain a negligible 0.09% stake. This lack of institutional participation reflects the company's micro-cap status, limited liquidity, and questionable business fundamentals, making it a highly speculative investment suitable only for investors with very high risk tolerance.
Stock Performance: Severe Underperformance Across All Timeframes
| Period | Stock Return (%) | Sensex Return (%) | Alpha (%) |
|---|---|---|---|
| 1 Week | +9.15 | -0.86 | +10.01 |
| 1 Month | +9.58 | +1.57 | +8.01 |
| 3 Months | -15.08 | +3.22 | -18.30 |
| 6 Months | -9.32 | +3.06 | -12.38 |
| YTD | -14.74 | +6.50 | -21.24 |
| 1 Year | -25.14 | +4.62 | -29.76 |
| 2 Years | +46.83 | +28.14 | +18.69 |
| 3 Years | +85.42 | +36.01 | +49.41 |
| 5 Years | +267.08 | +98.64 | +168.44 |
Kemp & Co's stock performance presents a bifurcated picture. Over longer timeframes of three to five years, the stock has generated substantial returns, with a 267.08% gain over five years and 85.42% over three years, significantly outperforming the Sensex. However, this longer-term outperformance masks the severe deterioration in recent periods, with the stock declining 25.14% over the past year whilst the Sensex gained 4.62%, resulting in negative alpha of -29.76 percentage points.
The recent weakness has been particularly pronounced, with the stock down 15.08% over three months and 9.32% over six months, both periods of underperformance relative to the broader market. The year-to-date decline of 14.74% contrasts sharply with the Sensex's 6.50% gain, highlighting investors' growing concerns about the company's deteriorating fundamentals and lack of visibility on a return to profitability.
Technical indicators paint a bearish picture, with the stock in a confirmed bearish trend since November 3, 2025. The shares are trading below all key moving averages, including the 5-day (₹1,236.58), 20-day (₹1,204.59), 50-day (₹1,375.49), and 100-day (₹1,379.93) averages. The MACD indicator shows bearish signals on both weekly and monthly timeframes, whilst the KST indicator similarly reflects bearish momentum. With the stock 32.27% below its 52-week high of ₹1,919.30, technical pressure remains firmly to the downside.
"With five consecutive quarters of losses, negative returns on capital, and no institutional investor interest, Kemp & Co represents a speculative micro-cap facing an existential profitability crisis."
Investment Thesis: Multiple Red Flags Signal Caution
The investment thesis for Kemp & Co is overwhelmingly negative across all key parameters. The company's quality grade of "BELOW AVERAGE" reflects weak long-term financial performance characterised by minimal sales growth (2.09% CAGR over five years), contracting EBIT (-15.53% CAGR), and persistently negative returns on capital. The financial trend is classified as "FLAT" despite the worsening quarterly losses, whilst the technical trend remains firmly "BEARISH" with the stock trading below all major moving averages.
The company's proprietary Mojo Score of 12 out of 100 places it firmly in the "STRONG SELL" category, a rating that has been in place since September 26, 2025. This exceptionally low score reflects the confluence of negative factors: bearish technical trend, flat financial performance, weak fundamental strength due to operating losses, and consistent underperformance relative to the broader market over the past year.
Key Strengths & Risk Factors
KEY STRENGTHS
- Debt-free balance sheet with zero leverage provides financial flexibility
- Stable promoter holding at 74.71% with no pledging of shares
- Substantial investment portfolio of ₹126.70 crores provides asset backing
- Long operating history since 1982 demonstrates business continuity
- Strong five-year stock returns of 267.08% for patient long-term holders
KEY CONCERNS
- Five consecutive quarters of losses since March 2024 with no turnaround in sight
- Operating margins at -61.19% represent worst performance in seven quarters
- Negative ROE of -0.77% and ROCE of -1.17% indicate value destruction
- Employee costs consuming over 50% of revenue create unsustainable cost structure
- Stagnant revenue growth of 2.09% over five years with declining EBIT
- Complete absence of institutional investor interest signals lack of confidence
- Persistent negative operating cash flow funded by asset liquidation
- Shareholder funds declined 38.84% from ₹211.80 crores to ₹129.54 crores in one year
- Stock down 25.14% over past year, underperforming Sensex by 29.76 percentage points
Outlook: What to Watch
POSITIVE CATALYSTS
- Return to quarterly profitability with positive operating margins
- Revenue growth exceeding 10% quarter-on-quarter for two consecutive quarters
- Rationalisation of employee costs to below 30% of revenue
- Positive operating cash flow generation for two consecutive quarters
- Entry of institutional investors (FII or mutual fund) signalling confidence
RED FLAGS TO MONITOR
- Further deterioration in operating margins below -70%
- Continued decline in investment portfolio below ₹100 crores
- Shareholder funds falling below ₹100 crores due to accumulated losses
- Any increase in promoter pledging from current zero level
- Stock breaking below 52-week low of ₹1,037.00
- Sixth or seventh consecutive quarterly loss without clear turnaround plan
The outlook for Kemp & Co remains challenging in the absence of a clear strategic plan to return the business to profitability. With operating margins at -61.19% and five consecutive quarters of losses, the company faces an existential challenge that requires decisive management action. Investors should monitor whether the company can stabilise revenue, rationalise costs, and demonstrate a credible path to positive operating cash flow. Until these fundamental improvements materialise, the investment case remains highly speculative and unsuitable for risk-averse investors.
The Verdict: Avoid This Speculative Micro-Cap
Score: 12/100
For Fresh Investors: Avoid initiating any position. The company's five consecutive quarters of losses, negative returns on capital, deteriorating operating margins, and complete absence of institutional investor interest make this an extremely high-risk proposition with no clear catalysts for improvement. The stock's bearish technical trend and 25.14% decline over the past year underscore the market's lack of confidence in the business model.
For Existing Holders: Consider exiting positions, particularly if holding unrealised losses. The ongoing destruction of shareholder value through quarterly losses and the 38.84% decline in shareholder funds over one year suggest further downside risk. Long-term holders sitting on gains from the five-year rally should consider taking profits whilst the stock remains above the 52-week low of ₹1,037.00. Only investors with very high risk tolerance and patient capital should consider holding for a potential turnaround, which appears unlikely in the near to medium term.
Fair Value Estimate: Given the loss-making status and lack of visibility on profitability, assigning a fair value is challenging. The current price of ₹1,300.00 appears to reflect book value of ₹1,199.21 per share, though continued losses will erode this further. A conservative estimate would place fair value 15-20% below current levels at ₹1,040-₹1,105, closer to the 52-week low, until the company demonstrates sustainable profitability.
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.
