The company's journey from its origins as Tak Machinery and Leasing Ltd. in 1961 to its current avatar as Mangal Credit & Fincorp reflects the broader transformation of India's NBFC sector. However, recent financial performance suggests the transition hasn't been entirely smooth. The stock currently trades below all major moving averages—5-day (₹179.87), 20-day (₹180.95), 50-day (₹183.69), 100-day (₹186.25), and 200-day (₹177.84)—painting a technically bearish picture that mirrors fundamental concerns.
Financial Performance: Revenue Growth Outpaces Profitability
Examining the quarterly trajectory reveals a company grappling with consistency. In Q2 FY26 (Jul-Sep'25), Mangal Credit reported net sales of ₹15.82 crores, marking the highest quarterly revenue in the company's recent history. This represents substantial sequential momentum, though detailed quarterly comparisons are limited by data availability. The company's operating profit before depreciation, interest, and tax (PBDIT) reached ₹11.49 crores in the same quarter, demonstrating strong operational leverage.
| Quarter | Net Sales (₹ Cr) | QoQ Growth | Operating Profit (₹ Cr) | Margin % |
|---|---|---|---|---|
| Dec'19 | 8.84 | +59.28% | 4.84 | 54.75% |
| Sep'19 | 5.55 | -55.02% | 0.98 | 17.66% |
| Jun'19 | 12.34 | -13.40% | 4.00 | 32.41% |
| Dec'18 | 14.25 | +93.88% | 10.45 | 73.33% |
| Sep'18 | 7.35 | -69.65% | -8.08 | -109.93% |
The volatility evident in historical quarters underscores the operational challenges micro-cap NBFCs face. The company experienced dramatic swings—from negative operating profits in Sep'18 to peak margins of 73.33% in Dec'18—reflecting the lumpy nature of its lending business. Annual figures provide a more stable perspective: for FY19 (Mar'19), Mangal Credit recorded net sales of ₹99.00 crores with an operating margin of 20.2%, representing an improvement from 17.3% in FY18.
However, the profit after tax declined to ₹7.00 crores in FY19 from ₹9.00 crores in FY18, highlighting margin pressure despite operational improvements. The PAT margin compressed to 7.1% from 8.2%, suggesting that cost management remains a persistent challenge. Interest costs of ₹9.00 crores and depreciation of ₹6.00 crores consumed a significant portion of operating profits, reflecting the capital-intensive nature of the lending business and the company's elevated leverage position.
Capital Efficiency: The ROE Conundrum
Return on equity stands as the most critical metric for assessing NBFC performance, and here Mangal Credit faces its biggest challenge. The company's average ROE of 7.25% over the past five years falls well below industry standards and investor expectations. For context, quality NBFCs typically generate ROEs in the 15-20% range, making Mangal Credit's performance approximately half of what best-in-class operators achieve.
Capital Efficiency Alert
Critical Concern: With an average ROE of 7.25% and latest ROE of 8.92%, Mangal Credit generates sub-optimal returns on shareholder capital. This weak capital efficiency reflects either inadequate pricing power, elevated operating costs, or sub-scale operations—all of which limit the company's ability to create sustainable shareholder value. The company's debt-to-equity ratio of 1.42 times further compounds concerns, as high leverage amplifies risk without commensurate returns.
The balance sheet as of Mar'19 reveals shareholder funds of ₹93.25 crores, comprising share capital of ₹19.31 crores and reserves of ₹73.93 crores. Current liabilities stood at ₹112.89 crores, with trade payables accounting for ₹23.61 crores. On the asset side, fixed assets totalled ₹21.91 crores, investments ₹14.75 crores, and current assets ₹26.71 crores. The book value per share of ₹69.74 compares to the current market price of ₹176.05, implying a price-to-book multiple of 2.64 times—a premium that appears unjustified given the weak ROE profile.
Return on capital employed (ROCE) of 11.74% provides additional context. Whilst marginally better than ROE, this metric still indicates that the company generates barely adequate returns on total capital deployed. For an NBFC operating with leverage of 1.42 times, these returns suggest limited competitive advantages or operational inefficiencies that prevent the company from translating growth into profitability.
Quality Assessment: Below Average Fundamentals
Mangal Credit's quality grade of "Below Average" reflects long-term financial performance that fails to meet institutional standards. The classification, maintained since August 2025, underscores persistent weaknesses that haven't improved despite revenue growth. Key quality factors paint a concerning picture: whilst 5-year sales growth of 42.18% appears impressive, it's accompanied by 5-year EBIT growth of just 21.80%—indicating that revenue expansion hasn't translated proportionately into earnings growth.
Quality Red Flags
Institutional holdings of merely 0.02% represent a glaring vote of no confidence from sophisticated investors. Foreign institutional investors hold just 0.01%, mutual funds 0.00%, and insurance companies 0.00%. This near-total absence of institutional participation suggests that professional money managers have evaluated Mangal Credit's fundamentals and found them wanting. The company's average net debt-to-equity of 1.42 times further limits its appeal, as high leverage restricts financial flexibility and amplifies downside risk.
The company's financial trend classification of "Positive" as of Sep'25 provides limited comfort. Whilst quarterly net sales and PBDIT reached record levels, the trend history shows frequent oscillations—from "Very Positive" to "Positive" to "Flat" and back—suggesting operational volatility rather than sustainable momentum. The June 2025 quarter was classified as "Flat," indicating that even recent performance hasn't been consistently strong.
Peer Comparison: Valuation Premium Without Justification
Positioning Mangal Credit within its peer group reveals a valuation anomaly that should concern investors. The company trades at a P/E ratio of 29.63 times trailing earnings, representing a 23% premium to the industry average of 24 times. However, this premium exists despite inferior fundamentals across multiple dimensions.
| Company | P/E (TTM) | ROE % | Debt/Equity | P/BV | Div Yield % |
|---|---|---|---|---|---|
| Mangal Credit | 29.63 | 7.25 | 1.42 | 2.64 | 0.40 |
| Unifinz Capital | 9.58 | 10.89 | 0.42 | 4.40 | 0.07 |
| Nahar Capital | 7.68 | 6.26 | 0.00 | 0.28 | 0.55 |
| Worth Investment | 219.32 | 6.89 | 0.40 | 9.86 | NA |
| Bombay Oxygen | NA (Loss Making) | 10.77 | 0.00 | 0.71 | 0.14 |
Compared to Unifinz Capital, which trades at just 9.58 times earnings despite delivering superior ROE of 10.89% and maintaining lower leverage of 0.42 times, Mangal Credit's valuation appears stretched. Even Nahar Capital, with comparable ROE of 6.26%, trades at a mere 7.68 times earnings. The only peer with a higher P/E multiple is Worth Investment at 219.32 times, though that appears to be an outlier driven by temporary earnings compression.
The price-to-book comparison reveals similar concerns. Mangal Credit's P/BV of 2.64 times sits in the middle of the peer range, but this multiple seems unjustified given the company's weak ROE. Financial theory dictates that P/BV multiples should correlate with ROE—companies earning high returns on equity deserve premium valuations, whilst those generating sub-par returns should trade at discounts to book value. Mangal Credit's 2.64 times P/BV with 7.25% ROE represents a significant valuation disconnect.
Valuation Analysis: Very Expensive Territory
The company's overall valuation assessment of "Very Expensive" reflects multiple stretched metrics. Beyond the P/E and P/BV ratios discussed above, enterprise value multiples paint an equally concerning picture. EV/EBITDA of 13.81 times and EV/EBIT of 14.27 times both suggest that investors are paying substantial premiums for current earnings streams. For a micro-cap NBFC with inconsistent profitability and weak ROE, these multiples offer limited margin of safety.
The valuation grade history shows persistent concerns, with the stock oscillating between "Expensive" and "Very Expensive" since mid-October 2025. Most recently, it changed to "Very Expensive" from "Expensive" on October 29, 2025. This classification reflects the stock's 24.15% premium to its 52-week low of ₹141.80, even as it trades 19.72% below its 52-week high of ₹219.30. The dividend yield of 0.40%, based on the latest dividend of ₹0.70 per share (ex-date September 17, 2025), provides negligible income support for investors.
Estimating fair value for Mangal Credit requires adjusting for quality and growth. Assuming a normalised ROE of 10% (still below industry standards but above current levels) and applying a conservative P/BV multiple of 1.5 times (appropriate for a below-average quality NBFC), fair value would approximate ₹104-110 per share. This suggests the current price of ₹176.05 embeds approximately 60-70% downside to fair value—a substantial risk that investors must acknowledge.
Shareholding Pattern: Promoter Confidence, Institutional Absence
The shareholding structure reveals a promoter-dominated company with virtually no institutional participation. Promoter holding stood at 55.25% as of Sep'25, up from 51.71% in Jun'25—a sequential increase of 3.54 percentage points. This increase occurred in Aug'25, suggesting promoters increased their stake, potentially through preferential allotment or open market purchases. The promoter group is led by Meghraj Sohanlal Jain (22.67%), Ajit S Jain HUF (11.77%), and Hardik Meghraj Jain (11.26%).
| Quarter | Promoter % | FII % | MF % | Insurance % | Non-Inst % |
|---|---|---|---|---|---|
| Sep'25 | 55.25 | 0.01 | 0.00 | 0.00 | 44.73 |
| Aug'25 | 55.25 | 0.20 | 0.00 | 0.00 | 44.54 |
| Jun'25 | 51.71 | 0.15 | 0.00 | 0.00 | 48.14 |
| Mar'25 | 51.71 | 0.00 | 0.00 | 0.00 | 48.29 |
| Dec'24 | 51.71 | 0.09 | 0.00 | 0.00 | 48.20 |
Foreign institutional investor holdings declined sharply from 0.20% in Aug'25 to just 0.01% in Sep'25, representing an exit of 0.19 percentage points. This reduction suggests that the limited FII presence that existed has largely evaporated. Mutual funds, insurance companies, and other domestic institutional investors maintain zero exposure, whilst other DII holdings remain negligible at 0.01%. Non-institutional investors comprise 44.73% of the shareholder base, reflecting primarily retail participation.
The absence of institutional investors carries significant implications. Sophisticated investors conduct rigorous due diligence before committing capital, evaluating business models, management quality, governance standards, and growth prospects. Their collective absence from Mangal Credit's shareholder register suggests that professional scrutiny has identified concerns that outweigh the company's growth narrative. This institutional void also limits liquidity, as evidenced by the modest daily trading volume of 6,968 shares on November 17, 2025.
Stock Performance: Underperformance Across Timeframes
Technical indicators uniformly point to weakness. The stock trades below all key moving averages, with the current price of ₹176.05 sitting below the 5-day MA (₹179.87), 20-day MA (₹180.95), 50-day MA (₹183.69), 100-day MA (₹186.25), and 200-day MA (₹177.84). This alignment suggests sustained selling pressure and lack of buying support at higher levels. The overall technical trend classification of "Sideways" masks underlying bearish momentum, with weekly indicators showing "Mildly Bearish" MACD, "Bearish" Bollinger Bands, and "Bearish" KST.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | -2.14% | +1.69% | -3.83% |
| 1 Month | -2.44% | +1.19% | -3.63% |
| 3 Months | -3.72% | +5.40% | -9.12% |
| 6 Months | +10.03% | +3.18% | +6.85% |
| YTD | +16.17% | +8.72% | +7.45% |
| 1 Year | +23.11% | +9.50% | +13.61% |
| 3 Years | +49.01% | +37.57% | +11.44% |
Returns analysis reveals a tale of two periods. Over longer timeframes—one year (+23.11%), three years (+49.01%), and five years (+289.49%)—Mangal Credit has delivered impressive absolute returns that significantly outpaced the Sensex. The one-year alpha of +13.61 percentage points and five-year alpha of +196.21 percentage points demonstrate substantial outperformance during the broader market rally.
However, recent performance tells a different story. The stock has declined 2.14% over the past week, 2.44% over one month, and 3.72% over three months—all periods during which the Sensex posted gains. The three-month alpha of -9.12 percentage points represents significant underperformance, suggesting that momentum has shifted decisively against the stock. The company's one-year return of 23.11% also lags the NBFC sector return of 25.60%, indicating relative weakness even within its peer group.
Risk metrics underscore the volatility inherent in this micro-cap stock. With an adjusted beta of 1.50, Mangal Credit exhibits 50% more volatility than the broader market—a high-beta characteristic that amplifies both gains and losses. The stock's 39.25% annualised volatility over the past year far exceeds the Sensex's 12.26% volatility, classifying it firmly in the "High Risk High Return" category. The risk-adjusted return of 0.59 compares unfavourably to the Sensex's 0.77, indicating that investors aren't being adequately compensated for the elevated risk they're assuming.
Investment Thesis: Mojo Score Signals Caution
The proprietary Mojo Score of 34 out of 100 places Mangal Credit firmly in "SELL" territory, with the recommendation to "Consider selling" and "Look for exit opportunities." This score, unchanged since July 24, 2025, reflects persistent concerns across multiple dimensions. The score breakdown reveals weaknesses in quality (Below Average grade), valuation (Very Expensive classification), and technical momentum (Sideways trend with bearish undertones).
The only positive element in the investment thesis is the "Positive" financial trend classification, reflecting record quarterly revenue and operating profit in Sep'25. However, this single bright spot cannot overcome the accumulated weight of quality concerns, valuation excesses, and deteriorating technical momentum. The Mojo 4 Dots Analysis assigns "NEUTRAL" to near-term drivers, "BELOW AVERAGE" to quality, "EXPENSIVE" to valuation, and "CAUTIOUS" to overall assessment—a configuration that offers little encouragement to prospective investors.
"With ROE barely above 7%, debt-to-equity at 1.42 times, and virtually no institutional participation, Mangal Credit trades at a valuation that assumes excellence it hasn't demonstrated."
Key Strengths & Risk Factors
KEY STRENGTHS
- Revenue Momentum: Quarterly net sales reached record levels of ₹15.82 crores in Q2 FY26, demonstrating growth trajectory
- Long-term Growth: Five-year sales CAGR of 42.18% reflects sustained business expansion
- Promoter Commitment: Promoter holding increased to 55.25% in Sep'25, up from 51.71%, signalling confidence
- Debt-Free Long-term Structure: Zero long-term debt as of Mar'19 provides financial flexibility
- Historical Returns: Five-year return of 289.49% significantly outpaced broader market indices
KEY CONCERNS
- Weak Capital Efficiency: Average ROE of 7.25% falls well below industry standards of 15-20%
- High Leverage: Debt-to-equity ratio of 1.42 times amplifies financial risk without commensurate returns
- Institutional Void: Near-zero institutional holdings (0.02%) reflects professional investor scepticism
- Stretched Valuation: P/E of 30x and P/BV of 2.64x unjustified given weak fundamentals
- Operational Volatility: Quarterly results show dramatic swings, indicating business instability
- Micro-cap Liquidity: Limited trading volumes restrict entry and exit flexibility
- Recent Underperformance: Three-month alpha of -9.12% signals momentum shift
Outlook: What to Watch
POSITIVE CATALYSTS
- ROE improvement above 12% through better asset pricing or cost management
- Institutional investor entry signalling improved governance or business model validation
- Consistent quarterly profitability demonstrating operational stability
- Leverage reduction below 1.0 times strengthening balance sheet resilience
- AUM growth acceleration with maintained or improved asset quality
RED FLAGS
- Further ROE deterioration below 7% indicating structural profitability issues
- Increase in leverage above 1.5 times without corresponding ROE improvement
- Promoter stake reduction suggesting waning confidence
- Asset quality deterioration or provision increases impacting earnings
- Continued institutional investor absence despite improved metrics
The path forward for Mangal Credit hinges on management's ability to address fundamental weaknesses whilst sustaining growth momentum. Investors should monitor quarterly ROE trends closely—any sustained improvement above 10% would represent meaningful progress, though even that level remains below industry standards. Balance sheet management, particularly leverage reduction and asset quality maintenance, will prove critical to building institutional confidence.
For the stock to justify its current valuation, the company would need to demonstrate not just revenue growth, but profitable growth that translates into improved shareholder returns. Until such evidence emerges, the disconnect between valuation and fundamentals represents the primary investment risk. The technical breakdown below all major moving averages suggests that the market is beginning to recognise this valuation-quality mismatch, potentially presaging further downside ahead.
The Verdict: Valuation Exceeds Fundamentals
Score: 34/100
For Fresh Investors: Avoid initiating positions at current valuations. The combination of weak ROE (7.25%), high leverage (1.42x), stretched multiples (30x P/E), and institutional absence creates an unfavourable risk-reward profile. Better opportunities exist within the NBFC sector offering superior fundamentals at more reasonable valuations.
For Existing Holders: Consider reducing exposure on any strength. Whilst long-term returns have been impressive, recent underperformance and deteriorating technicals suggest momentum has shifted. The 60-70% downside to estimated fair value of ₹104-110 represents substantial risk. Use any rallies towards ₹185-190 levels as exit opportunities.
Fair Value Estimate: ₹104-110 per share (approximately 40-37% downside from current levels of ₹176.05)
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 does not guarantee future results. Investments in micro-cap stocks carry elevated risks including limited liquidity, high volatility, and potential for significant capital loss.
