Oasis Securities Q2 FY26: Profit Plunges 64% Despite Revenue Recovery

The quarter's results underscore the erratic nature of Oasis Securities' business model, with revenue swinging wildly between periods. Net sales of ₹0.43 crores in Q2 FY26 marked a steep 50.57% sequential decline from Q1 FY26's ₹0.87 crores, though it represented a 290.91% year-on-year improvement from Q2 FY25's ₹0.11 crores. This extreme volatility raises questions about the sustainability and predictability of the company's earnings stream, a critical concern for investors evaluating long-term prospects.

The profit decline was driven primarily by the sharp revenue contraction, as operating margins remained relatively robust at 76.74%, down from 88.51% in the previous quarter. However, the tax rate surged to 29.41% in Q2 FY26 from 14.29% in Q1 FY26, further compressing net profitability. The company's PAT margin contracted to 55.81% from 75.86% sequentially, reflecting the combined impact of lower revenues and higher tax incidence.

Financial Performance: Volatile Revenue Trajectory Clouds Outlook

Oasis Securities' financial performance in Q2 FY26 exemplifies the challenges facing micro-cap NBFCs operating in niche segments. The company's net sales of ₹0.43 crores, while up 290.91% year-on-year from Q2 FY25's ₹0.11 crores, represented a dramatic 50.57% sequential decline from Q1 FY26's ₹0.87 crores. This pattern of extreme quarterly fluctuations—ranging from losses in Mar'24 and Mar'25 to profitable quarters in between—suggests an unstable revenue model lacking consistent deal flow or recurring income streams.

Operating profit excluding other income stood at ₹0.33 crores in Q2 FY26, yielding a healthy operating margin of 76.74%. However, this margin, whilst robust in absolute terms, declined from 88.51% in the previous quarter, indicating rising cost pressures or changing business mix. Employee costs remained modest at ₹0.07 crores, up from ₹0.06 crores sequentially, reflecting the company's lean organisational structure typical of micro-cap financial services firms.

The tax burden increased substantially in Q2 FY26, with the effective tax rate jumping to 29.41% from 14.29% in Q1 FY26. This normalisation of the tax rate, combined with the revenue decline, resulted in net profit of ₹0.24 crores, down 63.64% quarter-on-quarter. On a year-on-year basis, net profit declined 7.69% from ₹0.26 crores in Q2 FY25, despite the threefold revenue increase, highlighting margin compression and higher tax incidence.

Operational Challenges: Weak ROE and Declining Capital Efficiency

Oasis Securities' latest return on equity (ROE) of 5.75% represents a significant deterioration from its average ROE of 16.17%, signalling declining capital efficiency and profitability. For an NBFC, ROE is a critical metric that reflects how effectively the company generates returns on shareholder capital. The current quarter's ROE of 5.75% falls well below acceptable thresholds for financial services companies, where double-digit returns are typically expected to justify the inherent leverage and risk profile of the business model.

The company's return on capital employed (ROCE) stood at 12.05% as of the latest reporting period, indicating moderate efficiency in deploying capital across its operations. However, this metric must be viewed in context of the company's volatile earnings pattern and minimal scale. With shareholder funds of ₹14.94 crores as of Mar'17 and negligible long-term debt, Oasis Securities operates with a conservative balance sheet structure. The absence of leverage, whilst reducing financial risk, also limits the company's ability to scale operations and compete effectively in capital-intensive NBFC segments.

Balance sheet quality remains reasonable, with fixed assets of ₹2.87 crores and minimal current liabilities of ₹0.28 crores as of Mar'17. However, the lack of recent balance sheet data limits visibility into the company's current financial position, asset quality, and leverage profile. For an NBFC, transparency around loan book composition, asset quality indicators, and funding mix is essential for investor confidence—areas where Oasis Securities provides limited disclosure.

Long-Term Decline: Five-Year Sales Contraction Reflects Structural Weakness

Perhaps most concerning for long-term investors is Oasis Securities' 5-year sales growth rate of -47.12%, indicating a sustained contraction in business volumes over the past half-decade. This negative growth trajectory stands in stark contrast to the broader NBFC sector, which has experienced robust expansion driven by India's credit growth story and financial inclusion initiatives. The company's inability to participate in this sectoral tailwind suggests either strategic missteps, operational inefficiencies, or competitive disadvantages that have eroded market share.

Historical financial data reveals the extent of this decline. In FY17, the company reported net sales of ₹46.00 crores with minimal profitability (PAT margin of 0.0%). By FY16, sales stood at ₹34.00 crores, and in FY15, just ₹7.00 crores. The subsequent years appear to have witnessed further deterioration, with quarterly revenues now ranging between ₹0.11 crores and ₹0.96 crores—a fraction of historical levels. This dramatic shrinkage in scale raises questions about the viability of the current business model and management's ability to reverse the trend.

The company's 5-year EBIT growth of 10.13%, whilst positive, provides little comfort given the negative sales trajectory. This suggests that profitability improvements have come primarily from cost-cutting and operational restructuring rather than genuine business expansion. Such a strategy has natural limits and cannot substitute for top-line growth in driving long-term value creation.

Peer Comparison: Lagging on Valuation, Mixed on Profitability

Within the micro-cap NBFC peer group, Oasis Securities presents a mixed comparative picture. The company's P/E ratio of 60.00x appears reasonable compared to peers like Nam Securities (202.18x) and TCFC Finance (219.65x), though several peers are loss-making and trade at non-meaningful multiples. However, this relative valuation "attractiveness" must be viewed cautiously given the company's deteriorating fundamentals and uncertain growth outlook.

On profitability metrics, Oasis Securities' average ROE of 16.17% ranks favourably against most peers, with only Key Corp (32.98%) demonstrating superior capital efficiency. However, this comparison is somewhat misleading given the company's current quarter ROE of just 5.75%, which suggests the historical average may not be sustainable going forward. The price-to-book ratio of 3.45x appears elevated for a company with declining sales and deteriorating returns, particularly when compared to peers like TCFC Finance (0.43x) and Key Corp (0.63x).

The absence of debt across the peer group reflects the challenges facing micro-cap NBFCs in accessing cost-effective funding, limiting their ability to leverage equity capital and scale operations. Oasis Securities' zero leverage, whilst reducing financial risk, also constrains growth potential and competitive positioning in a sector where scale and funding access are critical success factors.

Valuation Analysis: Premium Multiples Unjustified by Fundamentals

Trading at a P/E ratio of 60.00x and price-to-book value of 3.45x, Oasis Securities commands valuation multiples that appear disconnected from its fundamental performance. The company's P/E of 60.00x represents a significant premium to the NBFC industry average of 23x, despite its negative 5-year sales growth, declining ROE, and volatile quarterly earnings. This valuation premium lacks fundamental justification and suggests the stock may be materially overvalued relative to its earnings power and growth prospects.

The EV/EBITDA multiple of 38.69x and EV/Sales of 26.46x further underscore the stretched valuation. For context, these multiples are typically associated with high-growth, scalable businesses with strong competitive moats—characteristics conspicuously absent in Oasis Securities' current operating profile. The company's valuation grade has oscillated between "Expensive" and "Very Expensive" over the past year, with the current assessment of "Very Expensive" reflecting market recognition of the valuation-fundamental disconnect.

Book value per share stands at ₹7.15, implying a fair value significantly below the current market price of ₹23.50. Even assuming a generous P/BV multiple of 1.5x (appropriate for a steady-state NBFC with modest growth), the stock would be worth approximately ₹10.73, suggesting 54% downside from current levels. This valuation exercise highlights the substantial premium embedded in the current stock price, leaving limited margin of safety for investors.

Shareholding Pattern: Stable Promoter Base, Zero Institutional Interest

Oasis Securities' shareholding structure reflects a stable promoter base holding 70.79% as of Sep'25, unchanged over the past three quarters. The promoter group, led by Rajesh Kumar Sodhani (54.96%) and Priya Sodhani (15.19%), demonstrates strong commitment to the company with no pledging of shares. This stable promoter holding provides some governance comfort, though it also limits free float and liquidity for public shareholders.

More concerning is the complete absence of institutional investors—foreign institutional investors (FIIs), mutual funds, and insurance companies all hold 0.00% stakes. This zero institutional participation speaks volumes about professional investors' assessment of the company's prospects and quality. Institutional investors typically conduct rigorous due diligence and favour companies with transparent governance, consistent performance, and credible growth strategies—attributes that appear lacking in Oasis Securities' current profile.

The 29.21% public shareholding consists entirely of retail and non-institutional investors, suggesting the stock may be driven more by speculative interest than fundamental conviction. The absence of any meaningful institutional buying over multiple quarters, despite the stock's volatility and occasional sharp moves, indicates a lack of conviction amongst sophisticated investors regarding the company's turnaround potential or value proposition.

Stock Performance: Severe Underperformance Across All Timeframes

Oasis Securities' stock performance has been dismal across short to medium-term horizons, with the share price declining 37.50% over the past year compared to the Sensex's 8.44% gain—a negative alpha of 45.94 percentage points. Year-to-date, the stock has plummeted 37.58% whilst the broader market gained 7.66%, underscoring the severity of the underperformance. The stock currently trades at ₹23.50, down 45.95% from its 52-week high of ₹43.48 and just 22.33% above its 52-week low of ₹19.21.

The recent performance contrasts sharply with longer-term returns, where the stock delivered exceptional gains. Over two years, Oasis Securities returned 147.11% versus the Sensex's 29.56%, whilst the three-year return of 207.79% dwarfed the market's 36.51% gain. However, these impressive historical returns appear to reflect a recovery from extremely depressed levels rather than sustainable business improvement, as evidenced by the subsequent sharp reversal.

Technical indicators paint a bearish picture, with the stock trading below all key moving averages—5-day (₹23.24), 20-day (₹23.73), 50-day (₹22.47), 100-day (₹23.27), and 200-day (₹25.64). The overall technical trend is classified as "Mildly Bearish," with multiple indicators signalling weakness. The stock's beta of 1.50 indicates high volatility relative to the market, amplifying both gains and losses. With an annual volatility of 66.15% and negative risk-adjusted returns of -0.57, the stock falls squarely into the "High Risk Low Return" category—an unfavourable risk-reward profile for most investors.

Investment Thesis: Multiple Red Flags Outweigh Limited Positives

The investment case for Oasis Securities is fundamentally challenged by a confluence of negative factors that overwhelm any potential positives. The company's proprietary Mojo Score of just 27 out of 100, with a "Strong Sell" rating, reflects the algorithm's assessment of deteriorating fundamentals, expensive valuation, and bearish technical setup. The quality grade of "Below Average" and financial trend classification of "Flat" provide little confidence in near-term improvement prospects.

The valuation assessment of "Very Expensive" at current levels of P/E 60x and P/BV 3.45x leaves no margin of safety for investors. Even if the company manages to stabilise operations and return to historical ROE levels, the current valuation appears to price in an optimistic turnaround scenario that has yet to materialise. The risk-reward equation is decidedly unfavourable, with substantial downside risk and limited upside potential given the stretched multiples and deteriorating fundamentals.

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