The Ludhiana-based non-banking financial company, with a market capitalisation of ₹972 crores, delivered net sales of ₹20.19 crores in Q2 FY26, representing modest growth of 1.82% sequentially and 27.38% year-on-year. Yet the company's operating profit margin excluding other income stood at just 5.15%, highlighting the persistent challenges in generating meaningful profits from core operations. The stock has declined 21.96% over the past year, significantly underperforming the Sensex's 5.94% gain, and currently trades at ₹38.06.
The quarterly results paint a picture of a company struggling to establish consistent operational excellence. Whilst the headline profit number appears impressive, the quality of earnings remains questionable given the disproportionate contribution from other income, which constituted ₹7.41 crores against a profit before tax of ₹7.52 crores. This means that nearly 98.5% of the pre-tax profit came from non-operating sources rather than the company's core business activities.
Financial Performance: Recovery Built on Fragile Foundations
Oswal Green Tech's Q2 FY26 performance shows sequential improvement in several metrics, but the underlying trends reveal persistent structural challenges. Net sales of ₹20.19 crores grew marginally by 1.82% from Q1 FY26's ₹19.83 crores, whilst demonstrating stronger year-on-year growth of 27.38% compared to Q2 FY25's ₹15.85 crores. However, this top-line expansion has not translated into meaningful operating profitability.
The operating profit (PBDIT excluding other income) stood at ₹1.04 crores in Q2 FY26, delivering a meagre margin of 5.15%. Whilst this represents a substantial recovery from Q1 FY26's alarming -32.48% margin, it remains far below the levels required for a sustainable business model. The company's inability to generate robust operating profits despite revenue growth points to persistent cost pressures and operational inefficiencies.
| Quarter | Net Sales (₹ Cr) | Operating Profit (₹ Cr) | Operating Margin (%) | Net Profit (₹ Cr) | PAT Margin (%) |
|---|---|---|---|---|---|
| Jun'25 | 20.19 | 1.04 | 5.15% | 6.66 | 32.99% |
| Mar'25 | 19.83 | -6.44 | -32.48% | -0.61 | -3.08% |
| Dec'24 | 15.32 | -6.43 | -41.97% | 0.53 | 3.46% |
| Sep'24 | 14.96 | -0.27 | -1.80% | 3.94 | 26.34% |
| Jun'24 | 15.85 | 0.70 | 4.42% | 4.67 | 29.46% |
| Mar'24 | 25.45 | 0.04 | 0.16% | 3.34 | 13.12% |
| Dec'23 | 9.73 | -7.84 | -80.58% | -2.75 | -28.26% |
Employee costs of ₹3.04 crores in Q2 FY26 increased by 14.29% sequentially, consuming 15.06% of net sales. Interest costs remained low at ₹0.20 crores, reflecting the company's minimal debt burden. Depreciation of ₹0.73 crores was lower than the previous quarter's ₹0.85 crores. The effective tax rate of 11.44% in Q2 FY26 was significantly lower than typical corporate tax rates, though this followed an anomalous negative tax rate in the previous quarter.
The Other Income Dependency: A Critical Vulnerability
The most concerning aspect of Oswal Green Tech's Q2 FY26 performance is its overwhelming reliance on non-operating income. Other income of ₹7.41 crores represented a staggering 98.54% of the profit before tax of ₹7.52 crores. This means that without other income, the company would have posted a pre-tax profit of merely ₹0.11 crores from its core operations.
This pattern is not an aberration but rather a persistent characteristic of the company's earnings profile. Over the past several quarters, other income has consistently propped up the bottom line, masking the underlying weakness in operational performance. For a company classified as a non-banking financial company, such heavy dependence on non-core income streams raises questions about the viability and sustainability of the business model.
Critical Red Flag: Earnings Quality Concern
Other income constituted 98.54% of profit before tax in Q2 FY26. This extreme dependency on non-operating income indicates that core business operations are barely profitable. Such earnings are inherently unstable and cannot be relied upon for consistent performance. Investors should view this as a major warning sign about the company's fundamental business strength.
The company's return on equity of just 0.42% in the latest period (with an average ROE of 1.21%) underscores the poor capital efficiency. For context, healthy companies typically deliver ROE in double digits, whilst Oswal Green Tech struggles to generate even 2% returns on shareholder funds. This abysmal capital efficiency, combined with weak operating margins, paints a troubling picture of value destruction rather than value creation.
Balance Sheet Analysis: Stability Amidst Operational Struggles
On a more positive note, Oswal Green Tech maintains a relatively clean balance sheet with zero long-term debt as of March 2018 (the latest available annual data). Shareholder funds stood at ₹2,267.67 crores, comprising share capital of ₹256.81 crores and reserves of ₹2,010.86 crores. The debt-free status eliminates financial leverage risk and provides some cushion against operational underperformance.
However, the company's asset composition reveals limited productive deployment of capital. Fixed assets of ₹121.96 crores represent a modest portion of total assets, whilst investments stood at just ₹1.21 crores. Current assets of ₹5.25 crores appear extremely low relative to the company's size, suggesting either conservative working capital management or limited business activity. Current liabilities of ₹79.82 crores, though manageable, exceed current assets significantly, pointing to potential liquidity management challenges.
Peer Comparison: Trailing the Pack
When benchmarked against NBFC peers, Oswal Green Tech's valuation and fundamental metrics reveal significant underperformance. The company trades at a P/E ratio of 92.91x, substantially higher than most peers, despite delivering the lowest return on equity in the peer group at just 1.21%. This valuation disconnect suggests the market may be overestimating the company's prospects or that the stock is experiencing speculative trading activity.
| Company | P/E (TTM) | Price to Book | ROE (%) | Debt to Equity |
|---|---|---|---|---|
| Oswal Green Tech | 92.91x | 0.39x | 1.21% | 0.00 |
| Jindal Poly Invest | 3.39x | 0.67x | 11.49% | 0.02 |
| Crest Ventures | 16.27x | 0.89x | 11.23% | 0.07 |
| Fedders Holding | 36.42x | 1.65x | 7.53% | 0.13 |
| Indl & Prud Invest | 16.60x | 1.27x | 6.43% | 0.00 |
| Aryaman Fin Services | 25.51x | 7.51x | 13.72% | 0.22 |
The price-to-book ratio of 0.39x is the lowest among peers, suggesting the market places minimal value on the company's assets. This discount is justified given the poor return on equity and inconsistent operational performance. Peers like Aryaman Financial Services deliver ROE of 13.72% whilst trading at higher valuations, reflecting their superior capital efficiency and business quality.
Valuation Analysis: Expensive Despite Poor Fundamentals
Oswal Green Tech's current valuation appears disconnected from its fundamental performance. Trading at a P/E ratio of 92.91x against an industry average of 24x, the stock commands a significant premium that is difficult to justify given its weak operational metrics and poor capital efficiency. The company's valuation grade has fluctuated between "Expensive" and "Very Expensive" over the past year, currently sitting at "Expensive" as of October 2025.
The price-to-book value of 0.39x, whilst appearing attractive on the surface, reflects the market's scepticism about the company's ability to generate adequate returns on its asset base. With a book value per share of ₹97.35 and current market price of ₹38.06, the stock trades at a 60.9% discount to book value. However, this discount is warranted given the ROE of just 0.42%, which means the company is destroying shareholder value rather than creating it.
The stock has declined 33.51% from its 52-week high of ₹57.24, currently trading at ₹38.06. Whilst this correction reflects deteriorating sentiment, it does not yet represent an attractive entry point given the fundamental challenges. The dividend yield is not applicable as the company last paid a dividend of ₹1.50 per share in July 2022, over three years ago, indicating limited cash generation capacity or management's reluctance to share profits with shareholders.
Shareholding Pattern: Promoter Reduction Signals Concern
The shareholding pattern reveals a notable decline in promoter holding, which dropped from 69.19% in June 2025 to 65.57% in September 2025—a reduction of 3.62 percentage points in a single quarter. This decrease is significant and often signals reduced confidence from those most intimately familiar with the company's prospects. The reduction coincides with an equivalent increase in non-institutional holdings, suggesting promoter stake sale to retail or non-institutional investors.
| Category | Sep'25 | Jun'25 | Mar'25 | QoQ Change |
|---|---|---|---|---|
| Promoter | 65.57% | 69.19% | 69.19% | -3.62% |
| FII | 0.01% | 0.00% | 0.02% | +0.01% |
| Mutual Funds | 0.01% | 0.01% | 0.01% | 0.00% |
| Other DII | 0.01% | 0.01% | 0.01% | 0.00% |
| Non-Institutional | 34.41% | 30.79% | 30.77% | +3.62% |
Institutional participation remains virtually non-existent, with FII holdings at just 0.01%, mutual fund holdings at 0.01%, and other DII holdings at 0.01%. This minimal institutional interest reflects the company's small size, poor liquidity, and questionable business fundamentals. Institutional investors typically conduct rigorous due diligence and their absence from the shareholding structure speaks volumes about the investment attractiveness of Oswal Green Tech.
The lack of pledged shares is a positive factor, eliminating concerns about forced selling in case of margin calls. However, the recent promoter stake reduction, combined with negligible institutional interest, creates an unfavourable ownership structure that could contribute to continued stock price weakness.
Stock Performance: Severe Underperformance Across Timeframes
Oswal Green Tech's stock performance has been dismal across most timeframes, with the stock generating negative alpha against the Sensex in nearly all recent periods. Over the past year, the stock has declined 21.96% whilst the Sensex gained 5.94%, resulting in a negative alpha of 27.90 percentage points. This underperformance extends across multiple timeframes, reflecting persistent investor disappointment.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | 1.44% | -1.38% | +2.82% |
| 1 Month | -6.78% | 2.77% | -9.55% |
| 3 Months | -10.19% | 3.01% | -13.20% |
| 6 Months | -5.65% | 3.67% | -9.32% |
| YTD | -19.64% | 6.81% | -26.45% |
| 1 Year | -21.96% | 5.94% | -27.90% |
| 2 Years | 46.27% | 29.67% | +16.60% |
| 3 Years | 43.89% | 36.93% | +6.96% |
The stock has underperformed the Non Banking Financial Company sector by 41.61 percentage points over the past year, with the sector delivering 19.65% returns compared to Oswal Green Tech's -21.96% decline. This massive underperformance versus both the broader market and sector peers highlights the company-specific challenges rather than sector-wide headwinds.
Technical indicators paint a uniformly negative picture. The stock trades below all key moving averages—5-day, 20-day, 50-day, 100-day, and 200-day—indicating sustained downward momentum. The overall technical trend is classified as "Bearish" since September 2025, with weekly and monthly MACD indicators flashing bearish signals. The stock's beta of 1.50 indicates high volatility, amplifying both gains and losses relative to the market.
"With a return on equity of just 0.42% and operating margins barely positive, Oswal Green Tech exemplifies value destruction rather than value creation—a company whose survival depends on non-operating income rather than business excellence."
Investment Thesis: Multiple Red Flags Warrant Caution
The investment case for Oswal Green Tech is severely compromised by multiple fundamental weaknesses. The company's Mojo Score of 23 out of 100 places it firmly in "Strong Sell" territory, reflecting poor performance across key parameters. The valuation remains expensive despite weak fundamentals, the quality grade is "Below Average," the financial trend whilst currently "Positive" is built on unstable foundations, and technical indicators are uniformly bearish.
The company's business model appears fundamentally challenged, with core operations generating minimal profitability. The overwhelming dependence on other income—which contributed 98.54% of pre-tax profit in Q2 FY26—creates an unsustainable earnings profile. Such income streams are typically volatile and unreliable, making it nearly impossible to forecast future performance with any confidence.
Key Strengths & Risk Factors
KEY STRENGTHS
- Debt-Free Balance Sheet: Zero long-term debt eliminates financial leverage risk and interest burden pressures.
- Revenue Growth Momentum: Net sales grew 27.38% year-on-year in Q2 FY26, indicating some demand for services.
- Sequential Operating Margin Recovery: Operating margin improved from -32.48% in Q1 to 5.15% in Q2, showing operational stabilisation.
- No Promoter Pledging: Absence of pledged shares eliminates forced selling risk during market downturns.
- Positive Short-Term Financial Trend: Latest quarter classified as "Positive" by trend analysis.
KEY CONCERNS
- Extreme Other Income Dependency: 98.54% of Q2 FY26 profit came from non-operating sources, indicating weak core business.
- Abysmal Capital Efficiency: ROE of 0.42% (average 1.21%) represents severe value destruction for shareholders.
- Weak Operating Margins: Operating margin of 5.15% is inadequate for sustainable profitability and growth.
- Promoter Stake Reduction: 3.62% decline in promoter holding in Q2 FY26 signals potential loss of confidence.
- Negligible Institutional Interest: Combined FII and MF holdings of just 0.02% reflect poor investment appeal.
- Expensive Valuation: P/E of 92.91x is unjustified given poor fundamentals and inconsistent performance.
- Bearish Technical Trend: Trading below all major moving averages with uniformly negative technical indicators.
Outlook: What to Watch
POSITIVE CATALYSTS
- Sustained improvement in operating margins above 10% for three consecutive quarters
- Significant reduction in other income dependency to below 30% of PBT
- ROE improvement to above 8% on a sustained basis
- Meaningful institutional investor participation or promoter stake increase
- Clear articulation of business strategy and revenue model by management
RED FLAGS
- Further decline in promoter holding below 60%
- Continued dependence on other income for profitability
- Operating margins slipping back into negative territory
- Sustained stock price decline below ₹31 (52-week low)
- Absence of dividend payments for another year
Going forward, investors should closely monitor whether the company can sustain its operating margin improvement and reduce dependency on other income. The Q3 FY26 results will be particularly telling—if operating margins deteriorate or other income contribution remains disproportionately high, it would confirm that Q2's performance was merely a temporary blip rather than a sustainable turnaround.
The Verdict: Fundamental Weakness Justifies Strong Sell Rating
Score: 23/100
For Fresh Investors: Avoid initiating any position in Oswal Green Tech. The company's poor capital efficiency (ROE of 0.42%), extreme dependence on non-operating income, expensive valuation (P/E of 92.91x), and bearish technical setup create an unfavourable risk-reward profile. Better opportunities exist within the NBFC sector with superior fundamentals and reasonable valuations.
For Existing Holders: Consider exiting positions at current levels or on any technical bounce towards the ₹40-42 resistance zone. The recent promoter stake reduction, combined with deteriorating fundamentals and bearish technical trends, suggests further downside risk. The company's inability to generate meaningful returns on shareholder capital makes it unsuitable for long-term wealth creation.
Fair Value Estimate: ₹28-30 (26-32% downside from current levels), based on discounted book value given the sub-1% ROE and operational challenges.
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.
