The quarter's performance reveals a company struggling to translate operational strength into meaningful growth. Whilst net sales expanded 5.70% sequentially to ₹4.45 crores from ₹4.21 crores, the year-on-year revenue growth of 6.46% from ₹4.18 crores suggests limited business momentum. The company's proprietary Mojo Score of 28 out of 100 places it firmly in "Strong Sell" territory, reflecting deep-seated concerns about valuation sustainability, technical weakness, and stagnating financial performance.
Financial Performance: Margins Under Pressure Despite Profit Growth
Qgo Finance's Q2 FY26 results present a mixed picture of operational efficiency deteriorating even as absolute profits inch higher. Net sales of ₹4.45 crores in Q2 FY26 represent a 5.70% quarter-on-quarter increase and 6.46% year-on-year growth, demonstrating modest business expansion. However, the operating profit before depreciation, interest, and tax (PBDIT) excluding other income stood at ₹3.86 crores with an operating margin of 86.74%, down from 89.07% in the previous quarter—a concerning 233 basis point sequential contraction.
| Quarter | Revenue (₹ Cr) | QoQ Change | Net Profit (₹ Cr) | QoQ Change | PAT Margin |
|---|---|---|---|---|---|
| Sep'25 | 4.45 | +5.70% | 0.84 | +7.69% | 18.88% |
| Jun'25 | 4.21 | +4.21% | 0.78 | +2.63% | 18.53% |
| Mar'25 | 4.04 | -0.74% | 0.76 | +13.43% | 18.81% |
| Dec'24 | 4.07 | -2.63% | 0.67 | -11.84% | 16.46% |
| Sep'24 | 4.18 | +1.46% | 0.76 | -12.64% | 18.18% |
| Jun'24 | 4.12 | +10.46% | 0.87 | -1.14% | 21.12% |
| Mar'24 | 3.73 | — | 0.88 | — | 23.59% |
Interest expenses climbed to ₹2.67 crores in Q2 FY26 from ₹2.64 crores in Q1 FY26, reflecting the company's continued reliance on borrowed capital to fund operations. Profit before tax reached ₹1.14 crores, up 8.57% sequentially from ₹1.05 crores, whilst net profit after tax of ₹0.84 crores represented a 7.69% quarter-on-quarter improvement. The tax rate normalised to 26.32% in Q2 FY26 from 25.71% in the previous quarter, aligning closer to standard corporate tax rates after abnormally low rates in earlier periods.
The profit after tax margin of 18.88% in Q2 FY26 showed marginal improvement from 18.53% in Q1 FY26 but remained significantly below the 21.12% achieved in Q2 FY24 and the 23.59% recorded in Q1 FY24. This sustained margin compression over the past year signals deteriorating profitability dynamics despite top-line growth, raising questions about the sustainability of earnings quality.
Capital Efficiency: Weak ROE Highlights Fundamental Challenges
Qgo Finance's return on equity (ROE) stands at 16.40% for the latest quarter, which appears reasonable on the surface but masks underlying concerns when viewed in context. The company's average ROE over the past five years is a weak 12.58%, significantly below the 15% threshold typically expected for quality financial services firms. This sustained underperformance in capital efficiency indicates the company struggles to generate attractive returns for shareholders relative to the equity capital employed.
Capital Efficiency Concern
Weak Long-Term ROE: Qgo Finance's five-year average ROE of 12.58% falls well below industry standards for quality NBFCs, which typically maintain ROE above 15%. This persistent underperformance suggests structural limitations in the company's ability to deploy capital profitably, raising questions about its competitive positioning and business model sustainability.
The company's return on capital employed (ROCE) of 13.74% similarly reflects modest capital productivity. For an NBFC operating in a competitive lending environment, these returns are insufficient to justify significant capital allocation or premium valuations. The balance sheet reveals shareholder funds of ₹18.11 crores as of March 2025, supported by share capital of ₹6.95 crores and reserves of ₹11.16 crores, representing accumulated retained earnings over time.
Current liabilities stood at ₹88.86 crores as of March 2025, up from ₹80.46 crores in the previous year, indicating growing reliance on short-term funding sources. With no long-term debt on the books, the company appears to fund its lending operations primarily through current liabilities, creating potential liquidity risks if asset-liability mismatches emerge. The debt-to-equity ratio of 4.85 times reflects high leverage typical of NBFCs but requires careful monitoring given the company's modest profitability metrics.
Asset Quality and Business Model: Limited Disclosure Raises Transparency Concerns
A significant limitation in assessing Qgo Finance stems from the absence of detailed asset quality metrics in available disclosures. For an NBFC, critical parameters such as gross non-performing assets (GNPA), net non-performing assets (NNPA), provision coverage ratio, and loan book composition remain undisclosed in the quarterly results, making it difficult for investors to gauge the true health of the lending portfolio.
The company's fixed assets stood at merely ₹0.47 crores as of March 2025, up from ₹0.22 crores in the previous year, suggesting minimal physical infrastructure—typical for financial services firms. Current assets of ₹3.85 crores in March 2025 represent the company's liquid resources, though detailed breakdowns of cash, receivables, and other current assets are not provided. This limited transparency around asset composition and quality creates information asymmetry that works against investor confidence.
Transparency Gap
The absence of detailed asset quality disclosures, loan book composition, and segment-wise performance metrics significantly hampers comprehensive analysis of Qgo Finance's business fundamentals. Investors lack visibility into critical NBFC metrics such as GNPA, NNPA, provision coverage, and portfolio diversification—information essential for assessing risk-adjusted returns and long-term sustainability.
Industry Positioning: Underperformance Against Peers and Sector
Qgo Finance's market positioning reveals significant competitive disadvantages when benchmarked against both the broader NBFC sector and specific peer companies. The stock has delivered a catastrophic one-year return of -24.80%, dramatically underperforming the NBFC sector's 18.88% return by 43.68 percentage points. This massive underperformance reflects deteriorating investor confidence and raises questions about the company's competitive viability.
| Company | Market Cap | P/E (TTM) | P/BV | ROE (%) | Div Yield |
|---|---|---|---|---|---|
| Qgo Finance | ₹31.92 Cr | 11.26 | 1.85 | 12.58% | 0.83% |
| Ramchandra Leas. | — | 3745.06 | 6.66 | 0.00% | — |
| West Leisure | — | NA (Loss Making) | 1.91 | 0.00% | 0.08% |
| Margo Finance | — | 172.52 | 0.28 | 0.14% | — |
| MPIL Corporation | — | NA (Loss Making) | 2.42 | 0.00% | 0.07% |
Relative to its micro-cap NBFC peers, Qgo Finance demonstrates superior profitability with an ROE of 12.58% compared to near-zero returns for most peers. The company's price-to-earnings ratio of 11.26 times appears reasonable compared to the industry average of 24 times and dramatically lower than peers like Ramchandra Leasing (3745.06 times) or Margo Finance (172.52 times). However, this valuation discount reflects market scepticism about growth prospects rather than representing a genuine bargain opportunity.
The price-to-book value of 1.85 times sits in the middle of the peer range, suggesting the market values Qgo Finance's equity at a modest premium to book value. The dividend yield of 0.83%, based on a dividend of ₹0.10 per share, provides minimal income support for investors whilst the company retains most earnings for business expansion.
Valuation Analysis: Attractive Multiples Fail to Compensate for Weak Fundamentals
Qgo Finance trades at seemingly attractive valuation multiples that belie deeper fundamental concerns. The current price of ₹45.91 represents a 35.16% decline from the 52-week high of ₹70.80, though it remains 20.82% above the 52-week low of ₹38.00. The company's proprietary valuation assessment rates it as "Attractive," having transitioned through multiple valuation grade changes over the past six months, most recently moving to Attractive from Very Expensive on July 31, 2025.
The price-to-earnings ratio of 11.26 times trailing twelve-month earnings appears compelling compared to the broader NBFC industry average of 24 times, representing a significant 53% valuation discount. However, this discount reflects market concerns about earnings quality, growth sustainability, and competitive positioning rather than representing a genuine value opportunity. The enterprise value-to-EBITDA multiple of 8.15 times and EV-to-EBIT of 8.34 times similarly suggest modest valuations on the surface.
The book value per share of ₹26.05 compared to the current price of ₹45.91 implies the stock trades at 1.85 times book value—a modest premium that reflects some market confidence in the company's ability to generate returns above its cost of equity. However, given the weak historical ROE of 12.58%, this premium appears unjustified on fundamental grounds. The PEG ratio remains unavailable due to inconsistent growth patterns, making it difficult to assess valuation relative to growth prospects.
Shareholding Pattern: Promoter Stake Reduction Signals Caution
Recent changes in Qgo Finance's shareholding pattern warrant careful attention from investors. Promoter holding declined to 60.48% in Q2 FY26 from 63.36% in the previous quarter, representing a 2.88 percentage point reduction. This marks the first change in promoter stake after three consecutive quarters of stability at 63.36%, raising questions about promoter confidence in the company's near-term prospects.
| Quarter | Promoter % | QoQ Change | Non-Institutional % | QoQ Change |
|---|---|---|---|---|
| Sep'25 | 60.48% | -2.88% | 39.52% | +2.88% |
| Jun'25 | 63.36% | — | 36.64% | — |
| Mar'25 | 63.36% | — | 36.64% | — |
| Dec'24 | 63.36% | — | 36.64% | — |
| Sep'24 | 63.36% | — | 36.64% | — |
The corresponding increase in non-institutional shareholding to 39.52% from 36.64% reflects the transfer of these shares to retail and other non-institutional investors. Notably, the company has zero institutional participation, with no holdings from foreign institutional investors (FIIs), mutual funds, insurance companies, or other domestic institutional investors (DIIs). This complete absence of institutional interest represents a significant red flag, as professional investors typically conduct rigorous due diligence before committing capital.
The key promoters include Rachana Singi with 57.60% and Deepika Nath with 2.88%. Positively, there is no promoter pledging, eliminating concerns about forced selling in adverse market conditions. However, the recent reduction in promoter stake, combined with zero institutional participation, suggests limited confidence from both insiders and professional investors in the company's value creation potential.
Stock Performance: Severe Underperformance Across All Timeframes
Qgo Finance's stock performance reveals consistent and severe underperformance across virtually all timeframes, reflecting sustained investor pessimism. The one-day decline of 5.71% on November 11, 2025, pushed the stock to ₹45.91, extending a broader pattern of weakness. Over the past week, the stock has declined 2.63%, underperforming the Sensex's 0.22% decline by 2.41 percentage points.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | -2.63% | -0.22% | -2.41% |
| 1 Month | +10.55% | +0.94% | +9.61% |
| 3 Months | -3.35% | +3.32% | -6.67% |
| 6 Months | -20.09% | +4.81% | -24.90% |
| YTD | -15.64% | +6.58% | -22.22% |
| 1 Year | -24.80% | +4.76% | -29.56% |
| 2 Years | -0.71% | +28.31% | -29.02% |
| 3 Years | +31.17% | +34.76% | -3.59% |
The one-month performance shows a positive 10.55% return, generating positive alpha of 9.61% versus the Sensex's 0.94% gain, representing a brief period of outperformance. However, this short-term strength fails to offset longer-term weakness. Over three months, the stock declined 3.35% whilst the Sensex gained 3.32%, resulting in negative alpha of 6.67 percentage points. The six-month performance is particularly concerning, with a 20.09% decline generating negative alpha of 24.90% versus the Sensex's 4.81% gain.
Year-to-date, Qgo Finance has declined 15.64% compared to the Sensex's 6.58% gain, resulting in negative alpha of 22.22 percentage points. The one-year return of -24.80% dramatically underperforms the Sensex's 4.76% gain by 29.56 percentage points. Over two years, the stock has essentially flatlined with a 0.71% decline whilst the Sensex surged 28.31%, representing catastrophic relative underperformance of 29.02 percentage points.
Longer-term returns provide some relief, with three-year gains of 31.17% and five-year returns of 226.76% demonstrating the stock's historical volatility. The five-year outperformance of 135.73 percentage points versus the Sensex's 91.03% return reflects a period of strong business expansion. However, recent underperformance suggests this growth phase has stalled, with the company now struggling to maintain momentum.
"The stock's catastrophic 24.80% one-year decline against the Sensex's 4.76% gain, combined with zero institutional participation and declining promoter stake, paints a picture of a company losing investor confidence across all stakeholder groups."
Technical Analysis: Bearish Trend Signals Further Downside Risk
Technical indicators for Qgo Finance paint a decidedly bearish picture, reinforcing fundamental concerns about the stock's near-term trajectory. The overall technical trend is classified as "Mildly Bearish" as of November 3, 2025, having transitioned from "Bearish" just days earlier. This recent trend change at ₹45.28 suggests the stock remains in a downtrend despite minor relief rallies.
The stock trades below all key moving averages, a classic sign of sustained weakness. The current price of ₹45.91 sits below the 5-day moving average of ₹46.92, the 20-day average of ₹45.76, the 50-day average of ₹44.85, the 100-day average of ₹46.78, and significantly below the 200-day average of ₹52.48. This complete breakdown below moving averages indicates strong selling pressure and lack of institutional support.
Technical indicator signals remain mixed to negative. The MACD shows "Mildly Bullish" on the weekly chart but "Bearish" on the monthly timeframe, suggesting short-term momentum improvements may prove fleeting. The RSI shows no clear signal on either weekly or monthly charts, indicating the stock is neither oversold nor overbought—simply stuck in a downtrend. Bollinger Bands signal "Bullish" on the weekly chart but "Mildly Bearish" monthly, reflecting high volatility without clear direction.
Key technical levels provide a roadmap for potential price action. Immediate support lies at the 52-week low of ₹38.00, approximately 17% below current levels. Immediate resistance sits at the 20-day moving average of ₹45.76, with major resistance at the 100-day average of ₹46.78. The 200-day moving average at ₹52.48 represents strong resistance, whilst the 52-week high of ₹70.80 appears a distant target requiring fundamental improvement to reach.
Investment Thesis: Multiple Red Flags Outweigh Valuation Appeal
The investment thesis for Qgo Finance must balance seemingly attractive valuation multiples against a litany of fundamental, technical, and governance concerns. The company's proprietary Mojo Score of 28 out of 100 reflects this challenging reality, with the "Strong Sell" rating driven by multiple converging negative factors.
From a valuation perspective, the stock trades at an attractive P/E ratio of 11.26 times, representing a significant discount to the industry average of 24 times. The price-to-book value of 1.85 times appears reasonable given the company's historical profitability. However, these low multiples reflect genuine concerns about earnings quality, growth sustainability, and competitive positioning rather than representing a value trap waiting to be discovered.
The quality assessment reveals fundamental weaknesses that justify the valuation discount. The company's five-year average ROE of 12.58% falls well below the 15% threshold expected for quality financial services firms, indicating persistent challenges in capital efficiency. The "Below Average" quality grade reflects weak long-term financial performance, high leverage with a debt-to-equity ratio of 4.85, and complete absence of institutional participation.
The financial trend assessment of "Flat" for Q2 FY26 highlights stagnating business momentum despite modest profit growth. Whilst the company achieved highest-ever quarterly PBDIT of ₹3.86 crores and PAT of ₹0.84 crores, the lack of meaningful acceleration in growth rates and ongoing margin pressure suggest the business has reached a plateau. The technical trend of "Mildly Bearish" reinforces this negative outlook, with the stock trading below all major moving averages and showing consistent underperformance.
Key Strengths and Risk Factors
Key Strengths ✓
- Attractive Valuation: P/E of 11.26x represents 53% discount to industry average of 24x, offering potential value for risk-tolerant investors
- Consistent Profitability: Company has maintained positive net profits across all recent quarters, demonstrating basic business viability
- No Promoter Pledging: Zero pledged shares eliminate forced selling risk in adverse market conditions
- High Operating Margins: Operating margin of 86.74% reflects efficient cost structure and strong gross profitability
- Long-Term Growth Track Record: Five-year sales CAGR of 33.10% and EBIT CAGR of 38.50% demonstrate historical expansion capability
Key Concerns ⚠
- Weak Capital Efficiency: Five-year average ROE of 12.58% significantly below 15% threshold for quality NBFCs, indicating poor capital deployment
- Zero Institutional Participation: Complete absence of FII, mutual fund, and insurance holdings signals lack of professional investor confidence
- Declining Promoter Stake: 2.88 percentage point reduction in Q2 FY26 raises questions about insider confidence in near-term prospects
- Severe Stock Underperformance: One-year return of -24.80% versus Sensex gain of 4.76% reflects sustained investor pessimism
- Margin Compression: PAT margin declined from 23.59% in Q1 FY24 to 18.88% in Q2 FY26, signalling deteriorating profitability
- High Leverage: Debt-to-equity ratio of 4.85 creates financial risk, particularly given modest profitability metrics
- Limited Transparency: Absence of detailed asset quality metrics and loan book composition hampers comprehensive risk assessment
Outlook: What to Monitor Going Forward
Positive Catalysts 📈
- Sustained revenue growth above 10% QoQ for multiple quarters
- PAT margin expansion back towards 21-23% range
- ROE improvement above 15% on a sustained basis
- Entry of institutional investors (FII, mutual funds)
- Stabilisation or increase in promoter shareholding
Red Flags 🚩
- Further decline in promoter stake below 60%
- Revenue growth slowing below 5% QoQ
- PAT margin falling below 18%
- Continued stock underperformance versus Sensex
- Increase in current liabilities without corresponding asset growth
The Verdict: Structural Weaknesses Outweigh Valuation Appeal
Score: 28/100
For Fresh Investors: Avoid initiating positions. Whilst valuation multiples appear attractive on the surface, the combination of weak capital efficiency (ROE 12.58%), zero institutional participation, declining promoter stake, severe stock underperformance (-24.80% one-year return), and flat financial momentum creates an unfavourable risk-reward profile. The "Strong Sell" rating reflects fundamental concerns that justify the valuation discount rather than representing a genuine value opportunity.
For Existing Holders: Consider reducing positions or exiting entirely. The stock's sustained underperformance across all recent timeframes, combined with deteriorating margins, stagnant financial trends, and bearish technical indicators, suggests limited near-term recovery potential. The recent 2.88 percentage point reduction in promoter stake raises additional concerns about insider confidence. Only investors with very high risk tolerance and long investment horizons should consider holding.
Fair Value Estimate: ₹38.00-₹42.00 (17% downside risk from current levels), based on continued weak fundamentals and lack of positive catalysts.
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. Past performance does not guarantee future results. Investments in micro-cap stocks carry substantially higher risks than large-cap equities, including liquidity risk, volatility risk, and potential for permanent capital loss.
