The December 2025 quarter marks a pivotal moment for One Mobikwik Systems, as the digital payments and financial services platform finally crossed into profitability territory after consecutive quarters of losses. Net sales for Q3 FY26 reached ₹288.95 crores, representing a 6.94% sequential increase from ₹270.21 crores in Q2 FY26 and a 7.23% year-on-year growth from ₹269.48 crores in Q3 FY25. However, the company's journey to profitability has been fraught with challenges, and several red flags continue to cloud the investment outlook.
The operating profit before depreciation, interest, and tax (excluding other income) stood at ₹6.70 crores in Q3 FY26, a remarkable improvement from the negative ₹15.49 crores in the previous quarter. This represents the highest operating profit in seven quarters and translates to an operating margin of 2.32%. The turnaround was achieved through improved operational efficiency and cost management, though the margin remains razor-thin by industry standards.
| Quarter | Dec'25 | Sep'25 | Jun'25 | Mar'25 | Dec'24 | Sep'24 | Jun'24 |
|---|---|---|---|---|---|---|---|
| Net Sales (₹ Cr) | 288.95 | 270.21 | 271.36 | 267.78 | 269.48 | 290.65 | 342.27 |
| QoQ Growth | +6.94% | -0.42% | +1.34% | -0.63% | -7.28% | -15.08% | — |
| Operating Profit (₹ Cr) | 6.70 | -15.49 | -41.45 | -56.51 | -47.66 | 3.78 | -1.33 |
| Operating Margin % | 2.32% | -5.73% | -15.27% | -21.10% | -17.69% | 1.30% | -0.39% |
| Net Profit (₹ Cr) | 4.05 | -28.62 | -41.92 | -56.04 | -55.28 | -3.59 | -6.62 |
| PAT Margin % | 1.40% | -10.59% | -15.45% | -20.93% | -20.51% | -1.24% | -1.93% |
Financial Performance: Profitability Achieved But Sustainability Questionable
The path to profitability in Q3 FY26 was driven by multiple factors. Revenue increased by 6.94% quarter-on-quarter to ₹288.95 crores, whilst operating expenses were contained, resulting in the operating profit turning positive. Employee costs declined to ₹41.49 crores from ₹43.08 crores in March 2025, demonstrating improved cost management. Interest expenses remained relatively stable at ₹7.23 crores, whilst depreciation stood at ₹3.69 crores.
However, a critical concern emerges when examining the composition of profits. Other income in Q3 FY26 stood at ₹8.27 crores, representing 204.20% of profit before tax. This means the company's operational profitability remains fragile, and without the cushion of non-operating income, the business would still be loss-making. The profit before tax (excluding other income) was negative ₹4.22 crores, highlighting that core operations have yet to achieve sustainable profitability.
On a year-on-year basis, the company's performance shows mixed signals. Whilst revenue grew 7.23% from ₹269.48 crores in Q3 FY25, the comparison is somewhat flattering given the base quarter also reflected operational challenges. The company reported a loss of ₹55.28 crores in Q3 FY25, making the current quarter's profit of ₹4.05 crores appear as a dramatic turnaround. However, the sustainability of this profitability remains the critical question for investors.
Structural Challenges: Weak Return Metrics and Persistent Losses
Despite the quarterly profit, One Mobikwik's long-term financial health remains deeply concerning. The company's return on equity (ROE) stands at 0.0% on average, indicating virtually no returns being generated on shareholder capital over the long term. The latest ROE figure of -32.48% reflects the cumulative impact of years of losses. The return on capital employed (ROCE) presents an even more alarming picture at -2,771.32%, suggesting severe capital inefficiency.
The company's balance sheet reveals the extent of accumulated losses. As of March 2025, shareholder funds stood at ₹588.65 crores, comprising share capital of ₹85.54 crores and reserves of ₹503.11 crores. However, this substantial increase in reserves from ₹92.94 crores in March 2024 to ₹503.11 crores in March 2025 appears to be driven primarily by fresh capital infusion rather than retained earnings, as the company reported a cumulative loss of ₹119.00 crores for the nine months ended December 2025.
Critical Red Flag: Non-Operating Income Dependency
Other income constituted 204.20% of profit before tax in Q3 FY26. This means the company's core operations remain unprofitable, and the reported profit is entirely dependent on non-operating income sources. Without the ₹8.27 crores in other income, the company would have reported a loss of ₹4.22 crores even in this "profitable" quarter. This raises serious questions about the sustainability and quality of earnings.
The company's debt position has improved, with long-term debt declining from ₹42.35 crores in March 2024 to zero in March 2025. However, current liabilities increased from ₹638.00 crores to ₹753.48 crores, indicating a shift in liability composition rather than deleveraging. The net debt to equity ratio of 0.65 suggests moderate leverage, though the company's weak profitability makes even this level of debt concerning.
Cash Flow Analysis: Operational Weakness Persists
The cash flow statement for FY25 reveals fundamental operational challenges. Despite reporting a modest profit of ₹14.00 crores for the full year FY24, the company generated negative cash flow from operations of ₹68.00 crores in FY25. This deterioration in operating cash flow, despite improved profitability in the latest quarter, suggests that working capital management remains a significant challenge.
The company's survival has been dependent on financing activities, which generated ₹514.00 crores in FY25, likely from equity infusion ahead of its initial public offering. Cash flow from investing activities was negative ₹313.00 crores, indicating deployment of capital into the business. The closing cash position improved to ₹112.00 crores in March 2025 from negative ₹20.00 crores in March 2024, providing some breathing room for operations.
| Cash Flow (₹ Cr) | FY25 | FY24 | FY23 | FY22 |
|---|---|---|---|---|
| Operating Cash Flow | -68.00 | -22.00 | 27.00 | -320.00 |
| Investing Cash Flow | -313.00 | 27.00 | 0.00 | -84.00 |
| Financing Cash Flow | 514.00 | 3.00 | 17.00 | 329.00 |
| Net Cash Flow | 133.00 | 8.00 | 44.00 | -75.00 |
| Closing Cash | 112.00 | -20.00 | -29.00 | -73.00 |
Industry Context: Lagging Behind Fintech Peers
The fintech sector in India has witnessed significant consolidation and maturation over the past few years. Whilst digital payments adoption has accelerated, profitability remains elusive for many players due to intense competition, regulatory pressures, and the need for continuous technology investments. One Mobikwik operates in a highly competitive landscape dominated by larger players with stronger balance sheets and established market positions.
The company's market capitalisation of ₹1,660 crores positions it as a small-cap stock in the fintech space, ranking sixth among its peer group. This relatively modest valuation reflects investor scepticism about the company's ability to scale profitably and compete effectively against better-capitalised rivals. The company's institutional holding of just 7.96% indicates limited confidence from sophisticated investors, a concerning signal given the company's recent listing.
| Company | P/E (TTM) | P/BV | ROE % | Debt/Equity |
|---|---|---|---|---|
| One Mobikwik | NA (Loss Making) | 2.98 | 0.0% | 0.65 |
| One 97 (Paytm) | 149.47 | 4.88 | 0.11% | 0.01 |
| PB Fintech | 156.59 | 10.68 | 3.23% | 0.05 |
| Pine Labs | NA (Loss Making) | 6.87 | 0.0% | 0.00 |
| Infibeam Avenues | 24.83 | 1.41 | 4.49% | -0.18 |
| Fino Payments | 24.72 | 2.35 | 12.98% | 0.00 |
Compared to peers, One Mobikwik's ROE of 0.0% is significantly weaker than established players like Fino Payments (12.98%), PB Fintech (3.23%), and Infibeam Avenues (4.49%). Even amongst loss-making peers, the company's track record of sustained losses raises concerns about its business model viability. The price-to-book ratio of 2.98x appears reasonable compared to peers, but this must be viewed in the context of the company's weak return profile and uncertain profitability trajectory.
Valuation Analysis: Risky Premium for Unproven Profitability
One Mobikwik's valuation metrics paint a challenging picture for investors. With the company loss-making on a trailing twelve-month basis, the P/E ratio is not applicable. The EV/EBITDA multiple of -6.48x and EV/EBIT of -5.97x reflect the company's operational losses, making traditional valuation metrics largely meaningless at this stage.
The EV/Sales ratio of 0.97x suggests the market is valuing the company at roughly its annual revenue, which may appear reasonable for a growth-stage fintech company. However, this valuation assumes the company can achieve sustainable profitability and scale its operations significantly. Given the fragile nature of the Q3 FY26 profit and the company's history of losses, this valuation appears optimistic.
The stock's valuation grade is classified as "RISKY," reflecting the high degree of uncertainty surrounding the company's future performance. The grade has oscillated between "Risky" and "Very Expensive" multiple times since listing, indicating significant volatility in market perception. At the current price of ₹232.85, the stock trades 44.36% below its 52-week high of ₹418.50, suggesting substantial value destruction for investors who entered near the peak.
Shareholding Pattern: Institutional Exodus Raises Concerns
The shareholding pattern reveals troubling trends in institutional investor confidence. Promoter holding has remained relatively stable at 25.11% as of December 2025, with marginal changes over recent quarters. However, the institutional investor base has shown significant volatility, particularly among mutual funds and foreign institutional investors.
| Quarter | Dec'25 | Sep'25 | Jun'25 | Mar'25 |
|---|---|---|---|---|
| Promoter | 25.11% | 24.87% | 25.03% | 25.18% |
| FII | 3.18% | 3.74% | 7.08% | 3.90% |
| Mutual Funds | 0.67% | 1.42% | 3.56% | 3.52% |
| Insurance | 2.69% | 1.69% | 0.00% | 0.00% |
| Other DII | 1.41% | 1.20% | 1.18% | 1.03% |
| Non-Institutional | 66.94% | 67.07% | 63.15% | 66.37% |
Mutual fund holding has declined sharply from 3.56% in June 2025 to just 0.67% in December 2025, representing a reduction of 2.89 percentage points over two quarters. This exodus of domestic institutional investors is a significant red flag, suggesting that professional fund managers are losing faith in the company's prospects. Foreign institutional investor holding has similarly declined from 7.08% in June 2025 to 3.18% in December 2025.
The dominance of non-institutional investors at 66.94% indicates that the stock is primarily held by retail investors, who may be more susceptible to volatility and less equipped to conduct thorough due diligence. The low institutional holding of just 7.96% overall is particularly concerning for a recently listed company, as it suggests sophisticated investors are staying away or exiting positions.
Stock Performance: Severe Underperformance Across Timeframes
One Mobikwik's stock performance has been disappointing across virtually all timeframes. Whilst the stock surged 17.30% on February 03, 2026, following the Q3 results, this one-day rally must be viewed in the context of severe underperformance over longer periods. The stock has declined 42.68% over the past year, massively underperforming the Sensex, which gained 8.64% over the same period, resulting in a negative alpha of 51.32 percentage points.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Day | +17.30% | +2.68% | +14.62% |
| 1 Week | +20.62% | +2.44% | +18.18% |
| 1 Month | +1.68% | -2.22% | +3.90% |
| 3 Months | -11.95% | -0.15% | -11.80% |
| 6 Months | -0.64% | +4.04% | -4.68% |
| 1 Year | -42.68% | +8.64% | -51.32% |
The stock's beta of 1.77 indicates it is significantly more volatile than the broader market, amplifying both gains and losses. The risk-adjusted return of -0.79 over one year, combined with volatility of 54.35%, places the stock firmly in the "HIGH RISK LOW RETURN" category. The Sharpe ratio is negative, indicating that investors have not been compensated for the substantial risk they have taken.
Technical indicators suggest the stock is in a sideways trend, having changed from mildly bearish on June 23, 2025. The stock currently trades below all major moving averages (5-day, 20-day, 50-day, 100-day, and 200-day), indicating persistent weakness. The 52-week low of ₹190.95 provides immediate support, whilst the 20-day moving average at ₹215.75 represents the first resistance level.
Investment Thesis: Unproven Business Model with High Execution Risk
One Mobikwik's investment thesis rests on its ability to scale its digital payments and financial services platform whilst achieving sustainable profitability. The company has demonstrated strong revenue growth, with a five-year sales CAGR of 48.80%, indicating robust top-line momentum. However, this growth has come at the cost of persistent losses and negative cash generation from operations.
The company's overall quality grade is classified as "Below Average," reflecting weak long-term financial performance. The average ROE of 0.0% over multiple years indicates the company has failed to generate meaningful returns for shareholders. The five-year EBIT growth of -26.26% shows that despite revenue growth, profitability has deteriorated, raising questions about the unit economics of the business model.
The proprietary investment score of 29 out of 100 places the stock firmly in "STRONG SELL" territory, with the recommendation to "strongly consider selling" or "exit recommended." This low score reflects the confluence of weak fundamentals, poor return metrics, institutional investor exodus, and uncertain profitability trajectory.
KEY STRENGTHS
- Strong revenue growth momentum with 48.80% five-year CAGR demonstrating market traction
- First quarterly profit achieved in Q3 FY26 after consecutive quarters of losses
- Operating margin improved to 2.32%, highest in seven quarters, showing operational efficiency gains
- Debt-free balance sheet with zero long-term debt as of March 2025
- Improved cash position with closing cash of ₹112 crores versus negative ₹20 crores in prior year
- Promoter holding stable at around 25%, indicating management commitment
- Operating in high-growth fintech sector with significant market opportunity
KEY CONCERNS
- Core operations remain unprofitable with other income exceeding 200% of PBT in Q3 FY26
- ROE of 0.0% indicates virtually no returns generated on shareholder capital over long term
- ROCE of -2,771.32% reflects severe capital inefficiency and value destruction
- Negative operating cash flow of ₹68 crores in FY25 despite improved quarterly profit
- Institutional investor exodus with mutual fund holding declining from 3.56% to 0.67%
- Stock down 42.68% over one year with negative alpha of 51.32 percentage points versus Sensex
- Quality grade classified as "Below Average" with weak long-term fundamentals
Outlook: What to Watch
The sustainability of profitability achieved in Q3 FY26 will be the critical factor determining One Mobikwik's investment merit going forward. Investors should closely monitor whether the company can maintain positive operating profits without relying on other income, improve return metrics, and generate positive operating cash flows. The fintech sector's competitive intensity and regulatory environment will also play crucial roles in shaping the company's trajectory.
POSITIVE CATALYSTS
- Sustained quarterly profitability demonstrating business model viability
- Operating margin expansion beyond 5% indicating operational leverage
- Positive operating cash flow generation for consecutive quarters
- Return of institutional investor interest with increased mutual fund holdings
- Strategic partnerships or acquisitions enhancing market position
RED FLAGS TO MONITOR
- Return to losses in subsequent quarters indicating Q3 was an aberration
- Continued reliance on other income to report profits
- Further decline in institutional holdings below current low levels
- Deteriorating operating cash flows requiring additional capital raises
- Increased competitive pressure from better-capitalised rivals
Investment Verdict
Score: 29/100
For Fresh Investors: Avoid initiating positions. The company's first quarterly profit is encouraging but insufficient to offset structural concerns including zero long-term ROE, severe capital inefficiency, and dependence on non-operating income for profitability. The institutional investor exodus and "Below Average" quality grade suggest sophisticated investors are staying away for good reason.
For Existing Holders: Consider exiting positions, particularly if holding from higher levels. The stock has destroyed 42.68% of value over the past year and trades with a "RISKY" valuation grade. Whilst the Q3 result provides a tactical exit opportunity following the 17.30% surge, the fundamental weaknesses and uncertain profitability trajectory make this an unsuitable long-term holding for risk-averse investors.
Fair Value Estimate: Given the loss-making history and unproven business model, assigning a fair value is challenging. The current price of ₹232.85 appears to embed optimistic assumptions about future profitability that may not materialise. A conservative approach would suggest significant downside risk if the company fails to sustain profitability in coming quarters.
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.
