One Point One Solutions Q3 FY26: Revenue Hits Record High, But Profit Slips on Tax Burden

The stock has faced significant headwinds, trading at ₹48.98 as of February 11, 2026, down 30.02% from its 52-week high of ₹69.99. The shares are currently below all key moving averages, reflecting investor concerns about profitability sustainability despite the company's strong topline momentum.

The company's performance reflects a tale of operational strength undermined by tax-related pressures. Whilst One Point One Solutions achieved its highest-ever quarterly revenue and maintained healthy operating margins, the bottom line was constrained by an elevated tax rate that jumped 710 basis points sequentially. This divergence between topline growth and profit performance has raised questions about the sustainability of margins and the company's ability to translate revenue gains into proportionate earnings growth.

Financial Performance: Topline Strength Masks Bottom-Line Pressure

One Point One Solutions delivered its strongest quarterly revenue performance in Q3 FY26, with net sales reaching ₹77.30 crores, representing a sequential growth of 9.07% and a year-on-year expansion of 17.69%. This marks the seventh consecutive quarter of revenue growth, underscoring the company's ability to capture market share in the commercial services sector. For the nine-month period ended December 2025, cumulative revenue stood at ₹217.18 crores, up 14.65% compared to the same period last year.

However, the profit trajectory tells a different story. Net profit for Q3 FY26 declined to ₹8.64 crores from ₹9.85 crores in Q2 FY26, a sequential contraction of 12.28%. Whilst year-on-year profit growth remained marginally positive at 2.49%, the deceleration is concerning. The primary culprit was the sharp escalation in the effective tax rate to 31.81% in Q3 FY26 from 24.75% in Q2 FY26, eroding profitability despite stable operating performance. For the nine-month period, net profit aggregated to ₹27.93 crores, reflecting a healthy 14.83% year-on-year growth, though the quarterly momentum has clearly stalled.

Operating profit excluding other income (PBDIT excl OI) improved to ₹18.85 crores in Q3 FY26, up from ₹17.04 crores in the previous quarter, with the operating margin expanding to 24.39% from 24.04%. This represents the highest operating margin in the last four quarters, signalling effective cost management. Employee costs, which constitute the largest expense category, rose to ₹46.19 crores from ₹42.47 crores quarter-on-quarter, but remained well-controlled as a percentage of revenue. The company's ability to maintain margins above 24% despite wage pressures demonstrates operational discipline.

The compression in PAT margin to 11.18% from 13.90% in Q2 FY26 reflects the tax headwind. Interest costs remained stable at ₹1.77 crores, whilst depreciation was flat at ₹6.91 crores. Other income, a significant contributor in recent quarters, declined to ₹3.97 crores from ₹4.69 crores, adding another layer of pressure. The combination of higher taxes and lower other income offset the gains from improved operating performance, resulting in the profit decline.

Operational Dynamics: Efficiency Gains Amid Structural Challenges

One Point One Solutions has demonstrated commendable operational efficiency, with the operating profit to interest coverage ratio reaching 10.65 times in Q3 FY26, the highest in recent quarters. This indicates a comfortable debt servicing ability despite the company's modest leverage. The company's return on equity (ROE) stood at 10.64% on an average basis, though this remains below peer benchmarks and reflects the challenges in generating superior returns on shareholder capital. The return on capital employed (ROCE) at 6.73% is particularly weak, signalling inefficiencies in capital deployment and the need for improved asset utilisation.

The balance sheet reveals a mixed picture. Shareholder funds expanded significantly to ₹404.98 crores in FY25 from ₹139.65 crores in FY24, driven by a substantial increase in reserves and surplus. Long-term debt declined to ₹1.49 crores from ₹8.00 crores, demonstrating deleveraging efforts. However, current liabilities decreased to ₹44.08 crores from ₹61.95 crores, reflecting improved working capital management. Fixed assets grew to ₹104.78 crores, whilst investments surged to ₹198.84 crores, indicating capital allocation towards financial assets rather than core operations.

Margin Dynamics: The Tax Conundrum

The most pressing issue facing One Point One Solutions is the erratic tax rate, which has fluctuated wildly across quarters. In Q3 FY26, the tax rate spiked to 31.81%, the highest in the last seven quarters, compared to 15.64% in Q4 FY25. This volatility suggests either one-time tax adjustments, deferred tax reversals, or changes in the tax structure that are not immediately apparent from the financials. For a company of this size, such fluctuations can materially impact profitability and complicate valuation.

Operating margins, on the other hand, have shown resilience. The operating margin excluding other income improved to 24.39% in Q3 FY26, recovering from the 18.30% trough in Q4 FY25. This improvement reflects better cost absorption as revenue scales up, though the margin remains below the 27.26% achieved in Q2 FY24. The company's ability to maintain margins above 24% is commendable given the labour-intensive nature of the commercial services business, but sustaining this level will require continued focus on operational efficiency and pricing power.

Gross profit margins have also been under pressure, declining to 25.33% in Q3 FY26 from 28.19% in Q2 FY26. This contraction, despite revenue growth, suggests either pricing pressures or an unfavourable revenue mix. The PAT margin compression to 11.18% from 13.90% underscores the challenges in translating topline growth into bottom-line gains, particularly when tax rates are elevated and other income contributions diminish.

Industry Leadership: How One Point One Compares to Peers

Within the commercial services and supplies sector, One Point One Solutions occupies a middle ground in terms of valuation and profitability metrics. The company trades at a P/E ratio of 35.75x, which is elevated compared to peers like Digitide Solutions (13.52x) and Alldigi Tech (17.71x), but significantly lower than RPSG Ventures (303.19x). The premium valuation relative to some peers reflects market expectations of continued growth, though the recent profit deceleration may test this optimism.

The company's ROE of 10.64% lags substantially behind sector leaders such as eClerx Services (24.29%) and Alldigi Tech (21.79%), indicating that One Point One is less efficient in generating returns on equity capital. This profitability gap is a key concern, as it suggests the company may need to invest more capital to achieve similar growth rates as higher-ROE peers. The P/BV ratio of 3.06x is moderate, sitting between the extremes of RPSG Ventures (0.96x) and eClerx Services (7.22x).

One Point One's debt-to-equity ratio of 0.08 is amongst the lowest in the peer group, reflecting a conservative capital structure with minimal leverage. This provides financial flexibility but also raises questions about whether the company is optimising its capital structure to enhance returns. The absence of dividend payments contrasts with peers like Alldigi Tech, which offers a 6.77% dividend yield, suggesting that One Point One is prioritising reinvestment over shareholder distributions.

Valuation Analysis: Fair but Lacking Margin of Safety

One Point One Solutions is currently valued at a P/E ratio of 35.75x based on trailing twelve-month earnings, which appears elevated given the company's modest ROE of 10.64% and recent profit deceleration. The PEG ratio of 10.14 is particularly concerning, indicating that the stock is trading at a significant premium relative to its growth rate. This suggests limited upside potential at current levels unless the company can meaningfully accelerate earnings growth or expand margins.

The price-to-book ratio of 3.06x implies that investors are paying three times the book value for each share, which is reasonable for a growth-oriented business but demands consistent execution. The EV/EBITDA multiple of 22.21x and EV/EBIT multiple of 40.83x are both elevated, reflecting market expectations of sustained profitability improvements. However, the recent tax-related profit squeeze raises doubts about whether these multiples are justified.

The stock has corrected 30.02% from its 52-week high of ₹69.99, currently trading at ₹48.98. This decline reflects investor concerns about profitability sustainability and the broader market's reassessment of micro-cap valuations. The valuation grade has oscillated between "Fair" and "Expensive" over the past year, with the current assessment at "Fair" suggesting the stock is reasonably valued but lacks a compelling margin of safety for fresh investors.

Shareholding: Foreign Institutional Exodus Raises Red Flags

The shareholding pattern reveals significant institutional activity, with foreign institutional investors (FIIs) reducing their stake sharply to 7.02% in Q3 FY26 from 15.90% in Q2 FY26, a sequential decline of 8.88 percentage points. This substantial reduction suggests that foreign investors are losing confidence in the company's near-term prospects, possibly due to concerns about profitability trends and valuation. The FII exodus is a red flag that cannot be ignored, as it often precedes further price weakness.

Promoter holding has remained stable at 52.29%, indicating continued management confidence. However, the presence of 33.72% pledged shares is concerning, as it suggests promoters may be using their holdings as collateral for loans, which could create overhang risk if the stock price declines further. Other domestic institutional investors (DIIs) have marginally increased their stake to 2.84% from 2.17%, but this modest buying is insufficient to offset the FII selling pressure.

The complete absence of mutual fund and insurance company holdings is notable, suggesting that larger domestic institutional investors have not found the stock attractive enough to build positions. The non-institutional category has increased to 37.85% from 29.64%, indicating that retail investors are stepping in as institutions exit, which is typically a contrarian signal that warrants caution.

Stock Performance: Underperformance Across All Timeframes

One Point One Solutions has significantly underperformed the broader market across most timeframes. Over the past year, the stock has declined 3.64%, whilst the Sensex has gained 10.41%, resulting in a negative alpha of 14.05 percentage points. The two-year performance is even more concerning, with the stock down 24.47% compared to the Sensex's 17.65% gain, translating to a massive underperformance of 42.12 percentage points.

Short-term trends are equally weak. The stock has declined 10.13% over the past month, 5.97% over three months, and 10.28% year-to-date, consistently underperforming the Sensex across these periods. The only bright spot is the 5.72% gain over six months, which slightly outpaced the Sensex's 4.50% return, but this positive momentum has clearly reversed in recent weeks.

The stock's high beta of 1.50 indicates that it is 50% more volatile than the broader market, which explains the sharp swings in both directions. The three-year return of 197.75% demonstrates the stock's potential during favourable conditions, but the recent two-year underperformance suggests that momentum has decisively shifted. The stock is currently trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day moving averages, signalling technical weakness.

Investment Thesis: Quality Concerns Overshadow Growth

One Point One Solutions presents a mixed investment case. On the positive side, the company has demonstrated consistent revenue growth, with sales expanding at a five-year CAGR of 22.24% and EBIT growing at 30.38%. The operating margin improvement to 24.39% in Q3 FY26 reflects operational discipline, and the low debt-to-equity ratio of 0.08 provides financial flexibility. The company's position in the commercial services sector offers exposure to India's growing services economy.

However, several quality concerns temper enthusiasm. The average ROE of 10.64% and ROCE of 6.73% are weak, indicating that the company is not generating attractive returns on invested capital. The volatile tax rate creates earnings unpredictability, whilst the recent profit decline despite revenue growth raises questions about operational leverage. The sharp FII selling and high promoter pledging add to the risk profile. The elevated PEG ratio of 10.14 suggests the stock is expensive relative to its growth prospects.

Key Strengths & Risk Factors

Outlook: What to Watch in Coming Quarters

The company's near-term trajectory will hinge on its ability to stabilise the tax rate and demonstrate that the Q3 FY26 profit decline was an aberration rather than the start of a worrying trend. Management commentary on tax normalisation and margin sustainability will be critical for investor confidence. Additionally, any further institutional selling or increase in promoter pledging would be negative signals that could pressure the stock further.

For existing shareholders, the key decision point revolves around whether the company's revenue growth momentum can eventually translate into meaningful profit expansion once tax rates normalise. The current valuation at 35.75x P/E offers limited margin of safety, suggesting that patience may be required before the investment thesis fully plays out. Fresh investors would be well-advised to wait for clearer evidence of earnings stability and improved capital efficiency before committing capital.