The quarter's performance reveals a company navigating significant operational headwinds whilst maintaining extraordinary profitability levels. The sequential revenue decline of 11.62% from Q1 FY26's ₹5.25 crores compounds concerns about the company's revenue trajectory, particularly when viewed against the backdrop of FY25's annual sales of ₹57.00 crores. The sharp year-on-year contraction suggests structural challenges in the company's core business operations.
| Quarter | Net Sales (₹ Cr) | QoQ Change | Net Profit (₹ Cr) | PAT Margin |
|---|---|---|---|---|
| Sep'25 | 5.86 | +11.62% | 2.88 | 49.15% |
| Jun'25 | 5.25 | -79.18% | 3.59 | 68.38% |
| Mar'25 | 25.22 | +250.28% | 7.53 | 29.86% |
| Dec'24 | 7.20 | -39.39% | 2.62 | 36.39% |
| Sep'24 | 11.88 | +10.41% | 4.05 | 34.09% |
| Jun'24 | 10.76 | -52.01% | 4.37 | 40.61% |
| Mar'24 | 22.42 | — | 3.31 | 14.76% |
Financial Performance: Profitability Amidst Revenue Turbulence
In Q2 FY26, Nagreeka Capital's net sales of ₹5.86 crores represented a dramatic 50.67% year-on-year decline from ₹11.88 crores in the corresponding quarter last year. On a sequential basis, revenue improved marginally by 11.62% from Q1 FY26's ₹5.25 crores, offering limited consolation given the overall downward trajectory. For the first half of FY2026 (H1 FY26), the company reported combined sales of ₹11.11 crores, a significant 51.79% decline from H1 FY25's ₹22.64 crores.
Despite the revenue challenges, profitability metrics remained remarkably robust. Net profit for Q2 FY26 stood at ₹2.88 crores, declining 28.93% year-on-year from ₹4.05 crores but improving 19.78% sequentially from Q1 FY26's ₹3.59 crores. The PAT margin of 49.15% in Q2 FY26, whilst lower than Q1 FY26's exceptional 68.38%, remains extraordinarily high by industry standards. For H1 FY26, cumulative net profit reached ₹6.47 crores, down 23.16% from H1 FY25's ₹8.42 crores.
The operating profit margin excluding other income stood at an unusual 100.17% in Q2 FY26, suggesting that the company's core operations generated more profit than its reported sales figure. This anomaly, combined with interest expenses of ₹2.01 crores and a tax rate of 25.19%, points to a business model heavily reliant on financial activities rather than traditional trading or service operations. The gross profit margin of 65.87% and minimal employee costs of ₹0.05 crores further underscore the capital-intensive nature of the company's operations.
Operational Challenges: Structural Weakness in Core Business
Nagreeka Capital's operational performance reveals concerning structural weaknesses. The company's five-year sales CAGR stands at a negative 0.34%, indicating persistent challenges in growing its top line. This long-term stagnation has been punctuated by extreme volatility, with quarterly sales swinging dramatically from ₹25.22 crores in Mar'25 to just ₹5.25 crores in Jun'25, and then to ₹5.86 crores in Sep'25. Such erratic revenue patterns suggest either project-based income recognition or significant business model instability.
The company's balance sheet as of March 2025 presents a mixed picture. Shareholder funds improved dramatically to ₹21.13 crores from just ₹2.57 crores in March 2024, driven by a turnaround in reserves from negative ₹3.74 crores to positive ₹14.82 crores. However, current liabilities remain elevated at ₹110.55 crores against current assets of just ₹9.67 crores, creating a significant working capital deficit. This imbalance, whilst improved from the previous year's gap, continues to raise questions about liquidity management.
Return on equity (ROE) stands at an exceptional 84.19% for the latest period, with an average ROE of 124.53% over recent years. These figures are remarkable by any standard and significantly exceed the industry average. However, investors must interpret these numbers cautiously given the company's small equity base of ₹21.13 crores and high leverage indicated by a debt-to-equity ratio of 4.51. The ROCE of 20.01%, whilst respectable, provides a more grounded view of capital efficiency when considering the company's entire capital structure.
Critical Concern: Revenue Volatility
Nagreeka Capital's quarterly revenue has fluctuated wildly over the past seven quarters, ranging from a low of ₹5.25 crores to a high of ₹25.22 crores. This extreme volatility, combined with a negative five-year sales CAGR of 0.34%, suggests fundamental instability in the business model. The company's inability to establish predictable revenue streams represents a significant risk for investors seeking consistent returns.
Industry Context: Underperforming the NBFC Sector
Within the Non-Banking Financial Company sector, Nagreeka Capital's performance has lagged considerably. Over the past year, the stock has delivered a marginal negative return of 0.22%, whilst the broader NBFC sector has advanced 25.11%, resulting in a substantial underperformance of 25.33 percentage points. This divergence highlights investor concerns about the company's specific challenges despite the favourable industry backdrop.
The micro-cap nature of Nagreeka Capital, with a market capitalisation of just ₹38.00 crores, places it at the extreme lower end of the NBFC universe. This positioning brings inherent liquidity constraints, with average daily trading volumes of just 508 shares on recent trading days. The stock's high beta of 1.50 indicates significantly greater volatility than the broader market, with annualised volatility of 58.40% compared to the Sensex's 12.26%.
From a longer-term perspective, the stock has demonstrated impressive returns over extended periods, gaining 106.90% over three years and 391.72% over five years. These figures substantially outpace the Sensex's returns of 37.22% and 93.78% respectively, generating alpha of 69.68% and 297.94%. However, the year-to-date decline of 14.37% against the Sensex's 8.22% gain suggests recent momentum has turned decidedly negative.
| Company | P/E (TTM) | P/BV | ROE (%) | Debt/Equity |
|---|---|---|---|---|
| Nagreeka Capital | 2.23 | 1.88 | 124.53% | 4.51 |
| Challani Capital | 22.90 | 5.27 | 14.89% | 0.09 |
| Sumedha Fiscal | 6.23 | 0.62 | 9.36% | 0.00 |
| Kapil Raj Financ | NA (Loss Making) | 2.75 | 6.55% | 0.00 |
| KJMC Financial | 30.07 | 0.25 | 0.39% | 0.09 |
Valuation Analysis: Attractive Multiples Mask Fundamental Concerns
At the current price of ₹31.47, Nagreeka Capital trades at a P/E ratio of just 2.23 times trailing twelve-month earnings, representing a substantial discount to the industry average P/E of 23 times. The price-to-book value of 1.88 times appears reasonable given the company's exceptional ROE of 84.19%, suggesting the market is pricing in significant uncertainty about earnings sustainability. The EV/EBITDA multiple of 5.94 times and EV/Sales of 2.82 times further reinforce the low valuation.
The company's valuation grade has been classified as "Attractive" since September 2025, having previously oscillated between "Very Expensive," "Risky," and "Expensive" classifications. This current attractive rating reflects the sharp correction from the 52-week high of ₹44.10, with the stock now trading 28.64% below that peak. The PEG ratio of 0.26 suggests the stock is undervalued relative to its growth potential, though this metric must be interpreted cautiously given the negative five-year sales CAGR.
Book value per share stands at ₹16.75, providing a tangible asset backing that is approximately 53% of the current market price. With 1.26 crore shares outstanding and equity capital of ₹6.31 crores, the company's capital structure remains lean. However, investors must weigh these attractive valuation metrics against the fundamental concerns surrounding revenue stability and the sustainability of current profitability levels.
Shareholding: Stable Promoter Base, Minimal Institutional Interest
The shareholding pattern of Nagreeka Capital has remained remarkably stable over the past five quarters, with promoter holding consistently at 53.53% and showing no sequential changes. The Patwari family, which founded the company in 1953, maintains control through multiple family entities and individuals, with Dadra Eximp Private Limited holding the largest stake at 16.69%. This concentrated promoter holding provides management stability but also limits free float available for trading.
Institutional participation remains negligible, with mutual fund holdings at a mere 0.03% and no presence from foreign institutional investors or insurance companies. The minimal institutional interest of just 0.03% total reflects the micro-cap nature of the company and likely concerns about liquidity and business visibility. Non-institutional investors hold 46.44% of the equity, representing primarily retail shareholders. Positively, there is no promoter pledging, indicating confidence in the business and eliminating one potential risk factor.
| Quarter | Promoter % | FII % | MF % | Non-Inst % |
|---|---|---|---|---|
| Sep'25 | 53.53% | 0.00% | 0.03% | 46.44% |
| Jun'25 | 53.53% | 0.00% | 0.03% | 46.44% |
| Mar'25 | 53.53% | 0.00% | 0.03% | 46.44% |
| Dec'24 | 53.53% | 0.00% | 0.03% | 46.44% |
| Sep'24 | 53.53% | 0.00% | 0.03% | 46.44% |
Stock Performance: Recent Weakness After Multi-Year Gains
Nagreeka Capital's stock price performance presents a tale of two timelines. Over extended periods, the stock has delivered exceptional returns, with gains of 106.90% over three years, 253.99% over four years, and an impressive 391.72% over five years. These returns substantially outpaced the Sensex, generating positive alpha of 69.68%, 214.65%, and 297.94% respectively. Such performance reflects the company's transformation from loss-making operations in FY23 to profitability in subsequent years.
However, recent performance has deteriorated markedly. The stock has declined 0.22% over the past year, underperforming the Sensex by 9.22 percentage points. Year-to-date, the stock is down 14.37% compared to the Sensex's 8.22% gain, representing an alpha of negative 22.59%. Over the past month, the stock has fallen 7.33%, underperforming the Sensex by 10.42 percentage points. The three-month and six-month returns of 15.91% and 15.11% respectively provide some consolation, outpacing the Sensex by 10.99% and 11.14%.
Technical indicators paint a mixed picture. The stock currently trades in a "Mildly Bullish" trend that commenced on November 11, 2025, at ₹30.87. Weekly technical indicators show bullish signals from MACD, moving averages, KST, and OBV, though Bollinger Bands suggest only mild bullishness. Monthly indicators are more concerning, with MACD and KST showing mildly bearish trends. The stock trades above most moving averages but faces immediate resistance at the 20-day moving average of ₹31.86. With annualised volatility of 58.40% and a high beta of 1.50, investors must prepare for continued price swings.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | -2.57% | 1.62% | -4.19% |
| 1 Month | -7.33% | 3.09% | -10.42% |
| 3 Months | 15.91% | 4.92% | +10.99% |
| 6 Months | 15.11% | 3.97% | +11.14% |
| 1 Year | -0.22% | 9.00% | -9.22% |
| 3 Years | 106.90% | 37.22% | +69.68% |
| 5 Years | 391.72% | 93.78% | +297.94% |
Investment Thesis: Attractive Valuation Cannot Offset Fundamental Weakness
The investment case for Nagreeka Capital rests on several competing factors. The company's proprietary Mojo score of 36 out of 100 places it firmly in "SELL" territory, reflecting concerns that outweigh potential positives. The quality assessment rates the company as "Below Average," noting weak long-term fundamental strength with negative five-year sales CAGR. The financial trend is classified as "Negative," driven by the 51.79% decline in H1 FY26 sales and 23.16% drop in net profit compared to the prior year period.
On the positive side, the valuation grade of "Attractive" reflects the stock's low P/E ratio of 2.23 times and reasonable price-to-book value of 1.88 times, particularly when considered against the exceptional ROE of 84.19%. Technical indicators show a "Mildly Bullish" trend, providing some near-term support. The absence of promoter pledging and stable shareholding pattern eliminate certain governance risks. The company's transformation from loss-making operations in FY23 to consistent profitability demonstrates management's ability to navigate challenges.
However, the negatives are substantial and structural. The 50.67% year-on-year revenue decline in Q2 FY26 and 51.79% drop in H1 FY26 revenues signal serious business model challenges. The extreme quarterly volatility in sales, ranging from ₹5.25 crores to ₹25.22 crores over recent quarters, suggests unpredictable cash flows and questionable revenue quality. The negative five-year sales CAGR of 0.34% indicates long-term stagnation. High leverage with a debt-to-equity ratio of 4.51 and a significant working capital deficit amplify financial risks. Minimal institutional holding of 0.03% reflects professional investors' lack of confidence.
Key Strengths & Risk Factors
KEY STRENGTHS
- Exceptional ROE of 84.19% demonstrates strong capital efficiency despite small equity base
- Attractive valuation with P/E of 2.23x and P/BV of 1.88x offering substantial discount to industry
- Strong profitability with PAT margins averaging 40-50% across recent quarters
- No promoter pledging eliminates governance risk and signals management confidence
- Impressive long-term returns of 391.72% over five years and 106.90% over three years
- Stable promoter holding at 53.53% provides management continuity
- Transformation from FY23 losses to consistent profitability in FY24-25
KEY CONCERNS
- Sharp 50.67% YoY revenue decline in Q2 FY26 and 51.79% drop in H1 FY26 signals serious business challenges
- Extreme quarterly revenue volatility (₹5.25 Cr to ₹25.22 Cr) indicates unpredictable business model
- Negative five-year sales CAGR of 0.34% demonstrates long-term stagnation
- High leverage with debt-to-equity ratio of 4.51 amplifies financial risk
- Significant working capital deficit with current liabilities of ₹110.55 Cr against current assets of ₹9.67 Cr
- Minimal institutional holding of 0.03% reflects lack of professional investor confidence
- Micro-cap status with market cap of ₹38 Cr creates severe liquidity constraints
- High volatility of 58.40% and beta of 1.50 indicates substantial price risk
Outlook: What Lies Ahead
POSITIVE CATALYSTS
- Stabilisation of quarterly revenues above ₹10 crores consistently
- Reduction in working capital deficit and improvement in current ratio
- Entry of institutional investors signalling improved business visibility
- Sustained profitability with PAT margins above 30% for four consecutive quarters
- Deleveraging through debt reduction and improved debt-to-equity ratio
RED FLAGS TO MONITOR
- Further sequential revenue decline in Q3 FY26 below ₹5 crores
- Deterioration in profitability with PAT margins falling below 25%
- Increase in debt levels or emergence of promoter pledging
- Continued absence of institutional buying interest
- Full-year FY26 revenue tracking below ₹30 crores
"Whilst Nagreeka Capital's 84% ROE and single-digit P/E ratio appear compelling on paper, the 51% revenue collapse in H1 FY26 and persistent business volatility represent fundamental risks that attractive valuation multiples cannot adequately compensate for."
The Verdict: Attractive Valuation Insufficient to Offset Revenue Collapse
Score: 36/100
For Fresh Investors: Avoid initiating positions. The 50.67% year-on-year revenue decline in Q2 FY26 and extreme quarterly volatility indicate serious structural challenges that outweigh the attractive P/E ratio of 2.23 times. The negative financial trend, below-average quality grade, and minimal institutional participation suggest significant uncertainty about business sustainability.
For Existing Holders: Consider reducing exposure on any technical rallies towards ₹34-35 levels. Whilst the exceptional ROE of 84.19% and absence of promoter pledging provide some comfort, the persistent revenue weakness and working capital deficit represent material risks. Monitor Q3 FY26 results closely for signs of stabilisation before considering retention.
Fair Value Estimate: ₹28-30 (11.04% downside from current levels), reflecting continued uncertainty around revenue trajectory and business model sustainability despite strong profitability metrics.
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.
