The micro-cap NBFC's latest quarterly performance underscores the severity of its operational challenges. With minimal revenue generation of just ₹0.05 crores in Q2 FY26—up from virtually zero in the previous quarter—the company remains far from achieving any meaningful scale. The operating profit before depreciation, interest, and tax stood at negative ₹0.04 crores, reflecting an alarming operating margin of -80.0%. Interest expenses of ₹0.03 crores continue to burden the already strained financials, pushing the pre-tax loss to ₹0.07 crores for the quarter.
What makes the situation particularly concerning is the company's inability to demonstrate any turnaround momentum despite being incorporated over three decades ago in December 1993. The balance sheet as of March 2025 reveals shareholder funds of negative ₹0.60 crores, comprising share capital of ₹4.70 crores offset by reserves and surplus of negative ₹5.30 crores. This negative net worth scenario indicates that the company's liabilities exceed its assets, raising serious questions about financial viability and going-concern status.
Financial Performance: A Pattern of Persistent Losses
Examining the quarterly trend reveals a consistent pattern of losses with negligible revenue generation. Over the past seven quarters from March 2024 to September 2025, net sales have remained at or near zero, with the exception of Q2 FY26's marginal ₹0.05 crores. The company's inability to generate meaningful revenue from its stated business activities—hire-purchase, bill discounting, and securities dealing—suggests either operational dormancy or fundamental business model challenges.
| Quarter | Net Sales (₹ Cr) | Operating Profit (₹ Cr) | Net Profit (₹ Cr) | Interest (₹ Cr) |
|---|---|---|---|---|
| Sep'25 | 0.05 | -0.04 | -0.07 | 0.03 |
| Jun'25 | 0.00 | -0.05 | -0.07 | 0.02 |
| Mar'25 | 0.00 | -0.02 | -0.04 | 0.02 |
| Dec'24 | 0.00 | -0.01 | -0.02 | 0.01 |
| Sep'24 | 0.00 | -0.02 | -0.05 | 0.03 |
| Jun'24 | 0.00 | -0.23 | -0.25 | 0.02 |
| Mar'24 | 0.00 | -0.03 | -0.06 | 0.03 |
The quarterly loss trajectory shows some volatility, with Q2 FY24 (Jun'24) recording the steepest loss of ₹0.25 crores. Whilst subsequent quarters have seen losses moderate to the ₹0.02-0.07 crores range, this improvement is relative and does not indicate sustainable profitability. Employee costs, though minimal at ₹0.03 crores in Q2 FY26, combined with interest expenses, continue to exceed the company's revenue-generating capacity.
Critical Financial Warning
Negative Net Worth Alert: With shareholder funds at negative ₹0.60 crores and book value per share at negative ₹1.27, the company's liabilities exceed its assets. This represents a fundamental solvency concern that typically warrants immediate corrective action or potential restructuring. Investors should note that negative book value scenarios often precede regulatory interventions or insolvency proceedings in the NBFC sector.
Balance Sheet Deterioration: Erosion of Capital Base
The balance sheet analysis reveals a troubling trajectory of capital erosion. Shareholder funds have deteriorated from ₹0.28 crores in March 2020 to negative ₹0.60 crores in March 2025, representing a complete wipeout of equity value. The reserves and surplus account has expanded its negative balance from ₹4.42 crores in March 2020 to ₹5.30 crores in March 2025, indicating cumulative losses of over ₹5 crores against a share capital base of ₹4.70 crores.
Interestingly, the company maintains a debt-free status with zero long-term borrowings, which typically would be viewed as a strength. However, in this context, it likely reflects the company's inability to access debt markets given its negative net worth and loss-making operations. Current liabilities have increased from ₹0.14 crores in March 2023 to ₹0.66 crores in March 2025, suggesting mounting short-term obligations. With minimal current assets of just ₹0.06 crores as of June 2024 and zero fixed assets or investments, the company lacks any meaningful asset base to support operations or provide creditor protection.
Operational Dormancy: An NBFC Without Business Activity
For a company incorporated with objectives including hire-purchase financing, bill discounting, and securities dealing, the complete absence of meaningful revenue generation raises fundamental questions about operational viability. The marginal ₹0.05 crores revenue in Q2 FY26 represents the first sign of any income in recent quarters, but this amount is insufficient to cover even the basic operating expenses.
The cash flow statement reveals minimal activity, with operating, investing, and financing cash flows all at or near zero for recent financial years. The closing cash balance stood at zero as of March 2025, indicating the company operates with no liquidity buffer. This absence of cash reserves, combined with negligible revenue and mounting losses, creates a precarious financial position that could rapidly deteriorate without capital infusion or business restructuring.
Regulatory Considerations for NBFCs
Non-banking financial companies in India operate under Reserve Bank of India oversight, with specific capital adequacy and net worth requirements. A negative net worth scenario typically triggers regulatory scrutiny and may result in restrictions on operations, mandatory capital restoration plans, or potential licence cancellation. Investors should be aware that Pasupati Fincap's current financial position may attract regulatory attention if not addressed promptly.
Peer Comparison: Lagging Across All Metrics
Comparing Pasupati Fincap with peer micro-cap NBFCs highlights the severity of its underperformance. Whilst several peers also face challenges, Pasupati Fincap's negative book value and price-to-book ratio of -7.05x stand out as particularly concerning. The company's return on equity of 0.0%—though technically undefined given negative equity—compares unfavourably even within a peer group characterised by weak profitability metrics.
| Company | P/E (TTM) | P/BV | ROE (%) | Debt/Equity |
|---|---|---|---|---|
| Pasupati Fincap | NA (Loss Making) | -7.05x | 0.0% | -0.73 |
| Northlink Fiscal | NA (Loss Making) | 1.61x | 0.0% | 0.11 |
| Hasti Finance | NA (Loss Making) | 1.04x | 0.0% | 0.00 |
| PS IT Infra | NA (Loss Making) | 0.22x | 0.0% | 0.15 |
| Jayabharat Cred. | NA (Loss Making) | -0.12x | 0.0% | -0.99 |
The negative price-to-book value of -7.05x indicates that the market is pricing the stock at a significant discount to its (negative) book value, reflecting deep scepticism about recovery prospects. The debt-to-equity ratio of -0.73, whilst technically indicating a net cash position, is misleading given the negative equity base. In reality, this metric underscores the fundamental capital structure impairment rather than financial strength.
Valuation Analysis: Metrics Rendered Meaningless by Losses
Traditional valuation metrics lose relevance when applied to a loss-making company with negative book value. The price-to-earnings ratio is not applicable given consistent losses, whilst the negative price-to-book ratio of -7.05x reflects the market's assessment that even the minimal ₹15.01 stock price may overvalue the company given its negative ₹1.27 book value per share. The EV/EBITDA ratio of -7.77x similarly provides little meaningful insight in the context of negative operating profits.
The company's current market capitalisation of ₹7.00 crores represents a dramatic decline from its 52-week high, with the stock trading 49.46% below that peak of ₹29.70. However, even at current depressed levels, the valuation grade remains "RISKY", reflecting the fundamental challenges that transcend mere price considerations. The absence of any dividend yield—unsurprising given the loss-making status—removes another potential source of shareholder returns.
Shareholding Pattern: Promoter Volatility Raises Concerns
The shareholding pattern reveals unusual volatility in promoter holdings, which oscillated between 0.00% in June 2025 and 11.55% in the subsequent quarters. This dramatic swing—with promoter holding dropping to zero and then returning to 11.55%—raises questions about corporate governance, regulatory compliance, and promoter commitment. Such volatility in promoter shareholding is atypical and may indicate internal challenges or strategic uncertainties.
| Quarter | Promoter % | QoQ Change | Non-Institutional % | Other DII % |
|---|---|---|---|---|
| Dec'25 | 11.55% | 0.00% | 88.42% | 0.02% |
| Sep'25 | 11.55% | +11.55% | 88.42% | 0.02% |
| Jun'25 | 0.00% | -11.51% | 99.98% | 0.02% |
| Mar'25 | 11.51% | 0.00% | 88.47% | 0.02% |
| Dec'24 | 11.51% | — | 88.47% | 0.02% |
Institutional participation remains virtually non-existent, with FII and mutual fund holdings at zero and other DII holdings at a negligible 0.02%. The absence of institutional interest is telling—sophisticated investors have clearly assessed the risk-reward profile and chosen to avoid exposure. Non-institutional investors hold 88.42% of the equity, suggesting a predominantly retail shareholder base that may lack the resources or influence to drive necessary restructuring.
Stock Performance: Severe Underperformance Across Timeframes
The stock's price performance reflects the market's assessment of the company's deteriorating fundamentals. Over the past year, Pasupati Fincap has declined 48.74%, dramatically underperforming the Sensex's 7.97% gain and the NBFC sector's 21.39% return. This translates to negative alpha of 56.71 percentage points versus the benchmark and 70.13 percentage points versus the sector—amongst the worst relative performances in the micro-cap NBFC space.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | -5.00% | +2.94% | -7.94% |
| 1 Month | -10.01% | +0.59% | -10.60% |
| 6 Months | -37.46% | +5.27% | -42.73% |
| YTD | -12.27% | -1.36% | -10.91% |
| 1 Year | -48.74% | +7.97% | -56.71% |
The stock's volatility of 70.61% over the past year—more than six times the Sensex's 11.53%—underscores the high-risk nature of this investment. With a beta of 1.50, the stock exhibits significantly higher volatility than the broader market, amplifying downside risk during market corrections. The risk-adjusted return of -0.69 confirms that investors have been penalised for taking on this elevated risk, receiving negative returns despite the high volatility.
Technical indicators paint an unambiguously bearish picture. The stock trades below all key moving averages—5-day (₹16.74), 20-day (₹21.79), 50-day (₹23.58), and 100-day (₹21.32)—indicating sustained selling pressure. The overall technical trend classification of "BEARISH" across weekly and monthly timeframes suggests continued downward momentum without near-term support levels.
Investment Thesis: Multiple Red Flags Outweigh Limited Positives
Constructing a bull case for Pasupati Fincap proves challenging given the preponderance of negative factors. The company's proprietary Mojo Score of 12 out of 100, coupled with a "STRONG SELL" advisory rating, reflects the quantitative assessment of its investment merit. The score breakdown reveals weakness across all four key parameters: valuation (RISKY), quality (BELOW AVERAGE), financial trend (FLAT), and technicals (BEARISH).
Limited Positives
- Debt-free balance sheet with zero long-term borrowings
- Marginal revenue generation in Q2 FY26 after several zero-revenue quarters
- Losses have moderated from Q2 FY24 peak of ₹0.25 crores
- Low institutional holding suggests limited forced selling risk
- Micro-cap status may allow for rapid transformation if restructuring succeeds
Critical Risk Factors
- Negative net worth of ₹0.60 crores indicates fundamental insolvency
- Book value per share of negative ₹1.27 reflects complete equity erosion
- Negligible revenue generation insufficient to cover basic operating costs
- Persistent quarterly losses with no clear path to profitability
- Zero cash reserves and minimal assets provide no financial cushion
- Volatile promoter shareholding pattern raises governance concerns
- Complete absence of institutional investor confidence
- Bearish technical trend with stock below all moving averages
- Extreme volatility (70.61%) amplifies downside risk
- Operational dormancy questions business viability
- Potential regulatory scrutiny given negative net worth status
Outlook: What Existing Shareholders Should Monitor
For the limited number of investors holding positions in Pasupati Fincap, the monitoring framework should focus on signs of either potential recovery or further deterioration. Given the company's precarious financial position, quarterly developments take on heightened significance.
Potential Positive Catalysts
- Capital infusion from promoters or strategic investors to restore positive net worth
- Concrete business restructuring plan with defined revenue targets
- Consistent revenue growth above ₹0.10 crores per quarter
- Reduction in operating losses towards breakeven
- Stabilisation of promoter shareholding above 15%
Warning Signs of Further Deterioration
- Further decline in net worth below negative ₹1.00 crores
- Return to zero revenue quarters
- Increase in quarterly losses above ₹0.10 crores
- Additional volatility in promoter shareholding
- Regulatory actions or compliance notices from RBI
- Stock price decline below ₹12.09 (52-week low)
The company's quality grade of "BELOW AVERAGE" and financial trend classification of "FLAT" suggest that even in the absence of further deterioration, the status quo represents an unsatisfactory investment outcome. The valuation grade of "RISKY" appropriately captures the elevated probability of permanent capital loss given the negative net worth scenario.
The Verdict: Exit Recommended for Risk Management
Score: 12/100
For Fresh Investors: Avoid completely. The negative net worth, negligible revenue, persistent losses, and absence of any credible turnaround plan make this an unsuitable investment at any price level. The fundamental insolvency risk far outweighs any potential speculative upside.
For Existing Holders: Exit positions at current levels to preserve remaining capital. Whilst the stock has declined significantly, further deterioration remains probable given the negative net worth trajectory and operational dormancy. The 48.74% one-year decline may represent only the beginning of value destruction if restructuring efforts fail to materialise.
Rationale: With negative book value of ₹1.27 per share, negligible revenue generation, and quarterly losses persisting across multiple periods, Pasupati Fincap exhibits fundamental characteristics of financial distress that typically precede either successful restructuring or terminal decline. The complete absence of institutional support, volatile promoter shareholding, and bearish technical indicators all point towards continued underperformance. The proprietary Mojo Score of 12/100 and STRONG SELL rating reflect the quantitative assessment that downside risks significantly exceed any potential recovery upside.
Note— Given the company's negative capital employed status, ROCE calculation is not meaningful and has been excluded from this analysis.
⚠️ 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 adviser before making any investment decisions. Past performance is not indicative of future results, and investments in micro-cap stocks with negative net worth carry substantial risk of total capital loss.
