The company's financial performance reveals a troubling pattern of inconsistency and minimal profitability. Originally incorporated in 1980 as Confidence Trading Company Limited, the entity has undergone multiple name changes before settling on its current identity. Operating in the financial services and trading segments, Longspur maintains a modest equity capital base of ₹13.65 crores divided amongst 1.36 crore shares. The stock's recent technical strength, marked by a bullish trend and prices trading above all key moving averages, stands in stark contrast to its flat financial trend and below-average quality rating.
Financial Performance: Minimal Profitability and Inconsistent Earnings
Longspur's financial statements paint a picture of a company struggling to generate meaningful profits. In Q1 FY2014 (June 2013 quarter), the company reported net profit of ₹0.16 crores, representing a 45.45% year-on-year increase but a dramatic 130.19% quarter-on-quarter decline from the previous quarter's loss of ₹0.53 crores in March 2013. This volatility underscores the company's inability to establish stable earnings momentum.
| Quarter | Net Profit (₹ Cr) | QoQ Change | YoY Change | Other Income (₹ Cr) |
|---|---|---|---|---|
| Jun'13 | 0.16 | -130.19% | +45.45% | 0.42 |
| Mar'13 | -0.53 | -220.45% | — | 0.26 |
| Dec'12 | 0.44 | +15.79% | — | 0.56 |
| Jun'12 | 0.38 | +245.45% | — | 0.45 |
| Mar'12 | 0.11 | — | — | 0.35 |
The company's reliance on other income is particularly concerning. In Q1 FY2014, other income of ₹0.42 crores far exceeded the operating profit before depreciation, interest, and tax (PBDIT) of ₹0.17 crores. This suggests that the core business operations are not generating sustainable profits, with earnings heavily dependent on non-operational sources. The operating profit excluding other income stood at a negative ₹0.24 crores, highlighting the fundamental weakness in the business model.
For the full year ending March 2013, Longspur reported profit before tax of ₹1.00 crore, entirely driven by other income of ₹1.00 crore. The company's total expenditure remained negligible, and with a tax rate of 0.0%, the reported figures raise questions about the sustainability and quality of earnings. The absence of meaningful revenue from financial services or trading activities indicates that the company is not actively engaged in its stated business operations.
Capital Efficiency: Abysmal Returns on Equity and Capital
The most damning indictment of Longspur's operational performance lies in its capital efficiency metrics. The company's average return on equity (ROE) of 0.34% ranks amongst the weakest in the entire NBFC sector, indicating that management has been unable to generate meaningful returns for shareholders despite having access to capital. For context, a healthy NBFC should deliver ROE in the range of 15-20%, making Longspur's performance approximately 50 times weaker than industry standards.
Critical Concern: Extremely Weak Capital Efficiency
Average ROE of 0.34% indicates that for every ₹100 of shareholder equity, the company generates a meagre ₹0.34 in annual profit. This represents catastrophically poor capital allocation and operational execution. The latest ROE of 2.66%, while improved, remains far below acceptable standards for any financial services company.
Similarly, the company's return on capital employed (ROCE) averages just 0.16%, with the latest figure at 2.46%. These metrics suggest that Longspur is effectively destroying shareholder value rather than creating it. The sales to capital employed ratio of 0.25x indicates extremely low asset turnover, meaning the company is unable to generate meaningful business activity relative to its capital base.
The debt-to-equity ratio of 0.00 indicates the company operates with virtually no financial leverage, which while reducing financial risk, also highlights the inability to deploy debt capital productively. For an NBFC, the absence of debt-funded lending operations is unusual and suggests the company may not be actively pursuing its core financial services mandate.
Cash Flow Analysis: Negative Operating Cash Generation
Longspur's cash flow statement for FY2013 reveals troubling operational dynamics. Despite reporting profit before tax of ₹1.10 crores, the company generated negative operating cash flow of ₹1.10 crores. This divergence between reported profits and actual cash generation is a significant red flag, suggesting that earnings may not be translating into real cash returns for the business.
The company made adjustments of ₹1.83 crores (negative) against profit before tax, indicating substantial non-cash income or timing differences. Changes in working capital consumed an additional ₹0.19 crores. To compensate for the negative operating cash flow, Longspur generated ₹1.67 crores from investing activities, likely through asset sales or investment redemptions, while financing activities consumed ₹0.05 crores.
The net result was a cash inflow of ₹0.52 crores, bringing the closing cash balance to ₹0.56 crores from an opening balance of ₹0.04 crores. However, the fundamental concern remains: the company cannot generate positive cash flow from its core operations, relying instead on liquidating investments or assets to maintain liquidity.
Peer Comparison: Lagging on All Key Metrics
When compared to peers in the micro-cap NBFC space, Longspur's underperformance becomes even more apparent. While the company trades at a P/E ratio of 17.89x, its operational metrics lag significantly behind comparable entities.
| Company | P/E (TTM) | ROE (%) | Debt/Equity | Price/Book |
|---|---|---|---|---|
| Longspur Intl | 17.89x | 0.34% | 0.00x | 0.48x |
| First Custodian | 32.50x | 7.78% | 0.00x | 0.89x |
| Econo Trade India | 5.92x | — | — | — |
| TCI Finance | 4.17x | 0.0% | -0.02x | -0.19x |
| Market Creators | NA (Loss Making) | 1.44% | 0.73x | 1.41x |
First Custodian, another peer in the micro-cap NBFC segment, demonstrates what operational competence looks like with an ROE of 7.78%—more than 20 times higher than Longspur's 0.34%. While First Custodian trades at a higher P/E of 32.50x, this premium is justified by significantly superior profitability metrics. Longspur's 0.48x price-to-book ratio suggests the market recognises the company's inability to generate adequate returns on its equity base, valuing it at a substantial discount to book value.
Valuation Analysis: Premium Pricing for Substandard Performance
Despite its operational challenges, Longspur trades at a P/E ratio of 18.0x, which appears expensive given the quality of earnings and growth prospects. The company's P/E is below the industry average of 32.0x, but this discount is insufficient given the fundamental weaknesses. The price-to-book ratio of 0.48x indicates the market values the company's assets at less than half their stated book value, reflecting scepticism about the realisable value of these assets or the company's ability to generate returns from them.
Valuation Dashboard
P/E Ratio (TTM): 18.0x (Below industry 32.0x, but expensive given 0.34% ROE)
Price/Book Value: 0.48x (Significant discount to book)
EV/EBITDA: 10.57x
Overall Assessment: Expensive relative to fundamentals
The company's valuation grade has fluctuated significantly over the past year, moving from "Very Expensive" in December 2024 to "Expensive" in January 2025, then to "Very Expensive" again before settling at "Attractive" in August 2025. As of November 17, 2025, the valuation is classified as "Attractive," but this assessment appears questionable when juxtaposed against the company's operational metrics. The PEG ratio of 0.14x suggests the stock might be undervalued relative to growth, but with such minimal absolute profitability, this metric loses relevance.
Shareholding Pattern: Modest Promoter Increase, Zero Institutional Interest
The shareholding structure reveals limited confidence from sophisticated investors. As of September 2025, promoter holding stood at 22.48%, representing a modest sequential increase of 0.60% from the previous quarter's 21.88%. This marginal increase suggests some confidence from the promoter, Manoj Naginlal Jain, but the relatively low absolute promoter stake of 22.48% is concerning for a micro-cap company where higher promoter commitment is typically expected.
| Quarter | Promoter % | QoQ Change | FII % | MF % | Non-Inst % |
|---|---|---|---|---|---|
| Sep'25 | 22.48% | +0.60% | 0.00% | 0.00% | 77.52% |
| Jun'25 | 21.88% | — | 0.00% | 0.00% | 78.12% |
| Mar'25 | 21.88% | — | 0.00% | 0.00% | 78.12% |
| Dec'24 | 21.88% | — | 0.00% | 0.00% | 78.12% |
More tellingly, foreign institutional investors (FIIs), mutual funds, insurance companies, and other domestic institutional investors (DIIs) have zero exposure to Longspur. The complete absence of institutional participation is a damning verdict on the company's investment merit. Non-institutional investors hold 77.52%, down 0.60% quarter-on-quarter, suggesting retail shareholders may be gradually reducing exposure. The positive note is that there is no promoter pledging, eliminating one potential risk factor.
Stock Performance: Technical Strength Masking Fundamental Weakness
Longspur's stock price performance over the past six months has been nothing short of spectacular, delivering returns of 71.19% compared to the Sensex's 3.18% gain—a remarkable alpha of 68.01%. Over three months, the stock surged 62.48% against the Sensex's 5.40%, generating alpha of 57.08%. This technical rally has pushed the stock to ₹10.22, just 2.39% below its 52-week high of ₹10.47.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | +1.59% | +1.69% | -0.10% |
| 1 Month | +9.19% | +1.19% | +8.00% |
| 3 Months | +62.48% | +5.40% | +57.08% |
| 6 Months | +71.19% | +3.18% | +68.01% |
| 1 Year | +9.77% | +9.50% | +0.27% |
| 3 Years | +58.45% | +37.57% | +20.88% |
However, this impressive short-term performance stands in stark contrast to longer-term results. Over two years, the stock delivered a meagre 0.79% return compared to the Sensex's 29.12%, underperforming by 28.33%. The 10-year performance is catastrophic, with the stock down 34.90% whilst the Sensex surged 228.45%—an underperformance of 263.35%.
The stock's beta of 1.50 classifies it as a high-beta security, indicating volatility 50% greater than the broader market. With a volatility of 28.27% compared to the Sensex's 12.26%, Longspur exposes investors to significantly higher risk. The current bullish technical trend, with the stock trading above all key moving averages (5-day, 20-day, 50-day, 100-day, and 200-day), suggests momentum-driven buying rather than fundamental conviction.
"A 71% six-month rally in a stock with 0.34% ROE exemplifies the disconnect between technical momentum and fundamental value—a dangerous combination for long-term investors."
Investment Thesis: Quality Concerns Override Technical Strength
Longspur's investment profile is characterised by a troubling mismatch between technical performance and fundamental quality. The company's quality grade of "Below Average" reflects its weak long-term financial performance, with the assessment noting it as a "below average quality company basis long term financial performance." The financial trend is classified as "Flat," indicating no meaningful improvement in operational metrics despite the passage of time.
The company's Mojo score of 46 out of 100 places it in the "SELL" category, with the recommendation to "consider selling" and "look for exit opportunities." This score declined from 51 (HOLD category) on October 1, 2025, reflecting deteriorating fundamentals despite rising stock prices. Key concerns limiting the score include flat financial performance in recent quarters, weak long-term fundamental strength with an average ROE of 0.34%, and flat results in Q1 FY2014.
The technical trend is bullish, with multiple indicators (MACD, Bollinger Bands, Moving Averages, KST) showing positive signals on weekly timeframes. However, this technical strength appears unsustainable without corresponding fundamental improvement. The stock's classification as "Medium Risk Medium Return" based on risk-adjusted metrics seems optimistic given the operational challenges.
Key Strengths and Risk Factors
Key Strengths ✓
- Strong Technical Momentum: Stock trading above all major moving averages with bullish indicators suggesting continued near-term support
- Impressive Short-Term Returns: 71.19% gain over six months demonstrates strong price momentum and trader interest
- Zero Debt: Debt-to-equity ratio of 0.00 eliminates financial leverage risk and bankruptcy concerns
- No Promoter Pledging: Absence of pledged shares removes one potential risk factor for equity dilution
- Attractive Valuation Grade: Current classification as "Attractive" suggests potential value opportunity if fundamentals improve
Key Concerns ⚠
- Catastrophically Low ROE: Average ROE of 0.34% indicates near-zero capital efficiency and value destruction for shareholders
- Negative Operating Cash Flow: Company unable to generate cash from core operations, relying on asset sales and other income
- Earnings Quality Issues: Heavy reliance on other income rather than operational profitability raises sustainability concerns
- Zero Institutional Participation: Complete absence of FII, mutual fund, and insurance company holdings signals lack of confidence
- Minimal Business Activity: Negligible revenue and expenses suggest the company is not actively pursuing its stated NBFC mandate
- High Volatility: Beta of 1.50 and volatility of 28.27% expose investors to significant downside risk
- Weak Long-Term Performance: 10-year return of -34.90% demonstrates sustained underperformance and value destruction
Outlook: What Lies Ahead
Positive Catalysts
- Continued technical momentum could drive further near-term gains
- Modest promoter stake increase suggests some insider confidence
- Low base effect means even small operational improvements could show significant percentage gains
- Zero debt provides financial flexibility for potential business expansion
Red Flags to Monitor
- Any reversal in technical indicators given weak fundamental support
- Continued reliance on other income rather than core operations
- Further absence of institutional buying despite stock rally
- Inability to demonstrate meaningful business activity in financial services
- Deterioration in already-weak ROE and ROCE metrics
The Verdict: Avoid Despite Technical Rally
Score: 46/100
For Fresh Investors: Avoid initiating positions. The impressive six-month rally of 71.19% is not supported by fundamental improvements and appears driven purely by technical momentum. With an ROE of just 0.34%, negative operating cash flows, and zero institutional participation, the risk-reward profile is highly unfavourable for long-term wealth creation.
For Existing Holders: Consider using the current technical strength as an exit opportunity. The stock's proximity to its 52-week high of ₹10.47 provides a favourable risk-reward for profit booking. The fundamental business shows no signs of improvement, and the disconnect between price performance and operational reality cannot persist indefinitely.
Rationale: Whilst technical indicators remain bullish, the fundamental weaknesses are too severe to ignore. A company generating 0.34% ROE, consuming cash from operations, and showing no meaningful business activity does not merit investment regardless of short-term price momentum. The absence of institutional investors and the company's below-average quality grade reinforce the SELL recommendation.
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.
