NDA Securities Q3 FY26: Mounting Losses Signal Deepening Operational Crisis

The stock has been under severe pressure, declining 2.24% on January 20, 2026, to close at ₹29.69, well below all key moving averages and down 55.01% from its 52-week high of ₹65.99. The sharp downturn in financial performance comes despite a stable promoter holding of 58.82% and minimal institutional participation, raising concerns about the company's ability to navigate the challenging brokerage environment.

Financial Performance: Revenue Erosion and Margin Collapse

NDA Securities' Q3 FY26 results reveal a troubling deterioration across all key financial metrics. Net sales contracted 26.67% year-on-year to ₹1.21 crores, continuing a downward trajectory that began in Q2 FY26. On a sequential basis, revenue declined 3.20% from ₹1.25 crores in Q2 FY26, marking the third consecutive quarter of declining sales.

The most alarming development has been the collapse in operating profitability. Operating profit (PBDIT excluding other income) plunged to a loss of ₹0.36 crores in Q3 FY26, translating to a negative operating margin of 29.75%, compared to a positive 16.36% margin in the year-ago quarter. This represents a margin contraction of 4,611 basis points year-on-year, driven by revenue weakness and relatively sticky employee costs of ₹0.53 crores.

The profit before tax stood at a loss of ₹0.46 crores in Q3 FY26, worsening from a loss of ₹0.39 crores in Q2 FY26. After accounting for a tax credit of ₹0.06 crores, the net loss reached ₹0.52 crores, resulting in a PAT margin of negative 42.98%. The company's earnings per share for the quarter stood at negative ₹0.87, the lowest level in the available data history.

Operational Challenges: Weak Capital Efficiency and Balance Sheet Concerns

The company's return on equity (ROE) has weakened to 6.58% as of the latest quarter, down from an average of 7.52% over the past five years. For a non-banking financial company, this level of capital efficiency is significantly below industry standards and reflects the company's struggle to generate adequate returns for shareholders. The low ROE, combined with operating losses, raises questions about the sustainability of the current business model.

On the balance sheet front, shareholder funds stood at ₹12.41 crores as of March 2025, comprising share capital of ₹5.95 crores and reserves of ₹6.47 crores. While the company maintains a conservative capital structure with zero long-term debt and a debt-to-equity ratio of just 0.02, the erosion of profitability threatens to deplete reserves if losses continue at the current pace.

Current assets of ₹17.04 crores as of March 2025 provide some liquidity cushion, though this has declined from ₹19.75 crores in March 2024. Current liabilities stood at ₹8.03 crores, down from ₹12.11 crores, suggesting improved working capital management even as operational performance has deteriorated. The company's fixed assets base remains minimal at ₹0.42 crores, reflecting the asset-light nature of the brokerage business.

Industry Context: Struggling in a Competitive Brokerage Landscape

The Indian brokerage industry has witnessed significant disruption over the past five years, with the rise of discount brokers and digital platforms putting pressure on traditional players. NDA Securities, with its focus on IPO distribution, mutual fund sales, equity research, and depository services, operates in an increasingly commoditised segment where scale and technology capabilities have become critical differentiators.

The company's declining revenue trajectory suggests it may be losing market share to larger, better-capitalised competitors. The absence of institutional holdings (0.0% combined FII, mutual fund, and insurance holdings) indicates that professional investors see limited value in the company's current business model and growth prospects. This lack of institutional support also limits access to growth capital that could be deployed for technology upgrades or business expansion.

Compared to its micro-cap NBFC peers, NDA Securities demonstrates superior ROE of 7.52% versus the peer average of approximately 2.00%, and maintains one of the lowest debt-to-equity ratios at 0.02. However, the company trades at a price-to-book value of 1.45x, slightly above the peer average of 1.20x, despite its recent operational struggles. The P/E ratio of 22.08x appears reasonable relative to the peer group average, though this metric may not be meaningful given the company's current loss-making status on a quarterly basis.

Valuation Analysis: Attractive Grade Belies Fundamental Weakness

NDA Securities currently trades at a P/E ratio of 22.08x based on trailing twelve-month earnings, marginally below the NBFC industry average of 23x. The price-to-book value of 1.45x suggests the market is valuing the company at a 45% premium to its book value of ₹21.53 per share. However, these valuation metrics may be misleading given the deteriorating earnings trajectory and recent quarterly losses.

The company's valuation grade stands at "Attractive" as of January 20, 2026, having fluctuated between "Attractive," "Fair," and "Very Expensive" over the past six months. This volatility in valuation assessment reflects the sharp price movements the stock has experienced, including the 55.01% decline from its 52-week high of ₹65.99. At the current price of ₹29.69, the stock trades just 22.18% above its 52-week low of ₹24.30, suggesting limited downside cushion.

The enterprise value-to-EBITDA multiple of 9.28x and EV-to-sales ratio of 1.48x appear reasonable on the surface, but these metrics lose relevance when the company is generating negative EBITDA in recent quarters. The absence of any dividend yield further limits the investment appeal for income-oriented investors.

Shareholding Pattern: Promoter Stability Amid Institutional Absence

The shareholding pattern reveals a concentrated ownership structure with promoters Ram Gopal Jindal and Gaurav Jindal holding a combined 58.82% stake as of December 2025. This represents a significant increase from 48.57% in March 2025, with a 10.25 percentage point jump occurring in June 2025. The increased promoter holding could signal confidence in the company's long-term prospects, though it has not translated into improved operational performance.

The complete absence of institutional investors—zero holdings from FIIs, mutual funds, insurance companies, and other domestic institutional investors—is a significant red flag. This lack of professional investor interest suggests concerns about corporate governance, business sustainability, or growth prospects. The non-institutional shareholding of 41.18% consists primarily of retail investors who may lack the resources to conduct deep fundamental analysis.

Positively, there is no promoter pledging of shares, indicating the promoters are not using their holdings as collateral for borrowings. This reduces the risk of forced selling in case of financial stress, though it does not address the underlying operational challenges facing the business.

Stock Performance: Severe Underperformance Across All Timeframes

NDA Securities' stock performance has been dismal across most time periods, with the share price declining 2.24% on January 20, 2026, to ₹29.69. The stock has underperformed the Sensex dramatically over the past year, delivering a negative return of 10.87% compared to the Sensex's 6.63% gain, resulting in a negative alpha of 17.50 percentage points.

The short-term performance has been particularly brutal, with the stock losing 14.59% over the past week, 17.85% over one month, and 36.36% over six months. The stock also underperformed its NBFC sector peers by 28.81 percentage points over the past year, with the sector delivering a 17.94% return compared to NDA Securities' 10.87% decline.

On a longer-term basis, the stock has delivered exceptional returns, gaining 154.85% over three years and 376.57% over five years, significantly outperforming the Sensex. However, these historical gains appear to be eroding rapidly given the recent operational deterioration and may not be sustainable if the company cannot return to profitability.

The stock currently trades below all major moving averages—5-day (₹32.91), 20-day (₹34.01), 50-day (₹33.59), 100-day (₹37.16), and 200-day (₹42.73)—indicating strong bearish momentum. The technical trend turned bearish on January 16, 2026, at ₹32.16, after being mildly bearish since October 27, 2025. Multiple technical indicators including MACD, RSI, Bollinger Bands, and KST all flash bearish signals, suggesting further downside risk in the near term.

Investment Thesis: Below-Average Quality Meets Deteriorating Fundamentals

NDA Securities carries an overall quality grade of "Below Average," reflecting weak long-term financial performance despite some positive historical metrics. The company's five-year sales growth of 4.12% and EBIT growth of 19.14% are modest at best, while the average ROE of 7.52% falls well short of what investors should expect from a financial services company.

The proprietary Mojo Score stands at a dismal 23 out of 100, firmly in the "Strong Sell" category. This score reflects the confluence of negative factors: bearish technical trend, flat financial performance in recent quarters, weak fundamental strength with operating losses, and significant underperformance versus the broader market. The score has declined from 40 (Sell) in early August 2025 to the current Strong Sell rating, tracking the deterioration in business fundamentals.

Outlook: What to Watch in Coming Quarters

The path forward for NDA Securities remains highly uncertain, with the company needing to demonstrate a credible turnaround plan to stem the bleeding in operating performance. Investors should closely monitor several key metrics and developments to assess whether management can stabilise the business and return to profitability.

Given the micro-cap nature of the stock and extreme volatility (89.20%), NDA Securities is suitable only for high-risk investors with deep understanding of the brokerage business and ability to withstand significant price fluctuations. The current operating environment suggests that any recovery will take multiple quarters to materialise, if it occurs at all.