Relic Technologies Q3 FY26: Mounting Losses Signal Deepening Financial Crisis

The company's stock price stood at ₹81.00 as of February 12, 2026, reflecting a 5.03% gain on the day despite the concerning quarterly performance. Trading volumes remained thin at 3,286 shares, characteristic of the company's micro-cap status and limited institutional participation of just 0.02%.

Financial Performance: Revenue Collapse Drives Margin Implosion

In Q3 FY26, Relic Technologies recorded net sales of ₹0.32 crores, a sharp 46.67% decline from ₹0.60 crores in Q2 FY26 and a 31.91% drop year-on-year from ₹0.47 crores in Q3 FY25. This sequential revenue contraction represents the company's worst quarterly performance since Q1 FY26, when sales had surged to ₹1.28 crores—a level that now appears increasingly anomalous given the subsequent collapse.

The operating profit before depreciation, interest, and tax (PBDIT) excluding other income plunged to -₹1.64 crores in Q3 FY26, the lowest level in the company's recent history. The operating margin deteriorated catastrophically to -512.5%, driven by employee costs of ₹1.26 crores—nearly four times the quarter's revenue. This expense structure is fundamentally unsustainable for a company generating such minimal top-line revenue.

Employee costs have emerged as the primary drain on profitability, surging from ₹0.70 crores in Q2 FY26 to ₹1.26 crores in Q3 FY26, an 80% quarter-on-quarter increase. This escalation occurred precisely when revenues were collapsing, suggesting a severe misalignment between the company's cost structure and its operational reality. Year-on-year, employee costs have exploded from ₹0.07 crores in Q3 FY25 to ₹1.26 crores in Q3 FY26—an 1,700% increase that has single-handedly destroyed any prospect of profitability.

Operational Challenges: Negative Returns Signal Quality Concerns

The company's return on equity (ROE) stands at a deeply negative -15.24% for the latest period, reflecting the destruction of shareholder value through persistent losses. Even the five-year average ROE of 3.74% falls far below acceptable standards for financial services companies, where double-digit returns are typically considered baseline performance. This weak capital efficiency underscores the company's inability to generate adequate returns from its equity base of ₹9.84 crores.

Return on capital employed (ROCE) presents an even bleaker picture at -29.61%, indicating that the company is destroying value on every rupee of capital deployed in its operations. For an NBFC operating in India's competitive brokerage industry, such negative returns signal fundamental business model challenges that extend beyond cyclical market conditions.

The balance sheet reveals a company with minimal leverage—debt-to-equity of just 0.25—suggesting that Relic Technologies has been unable to scale its operations through borrowed capital. Fixed assets increased to ₹2.58 crores in FY25 from ₹0.99 crores in FY24, a 160% jump that appears disconnected from the company's revenue-generating capacity. Current assets of ₹7.76 crores include substantial cash reserves, yet the company continues to bleed cash operationally.

Industry Context: Struggling in a Thriving Sector

The NBFC sector has delivered robust returns of 27.43% over the past year, yet Relic Technologies has managed to outperform this benchmark by 76.81 percentage points purely on stock price appreciation—a performance driven entirely by speculative trading rather than fundamental improvement. This divergence between stock performance and operational reality creates significant risks for investors who may be lured by the 104.24% one-year return without understanding the underlying business deterioration.

The company's institutional holding of just 0.02% speaks volumes about professional investors' assessment of its prospects. In contrast, peer NBFCs with stronger fundamentals typically attract substantial institutional interest. The absence of meaningful institutional participation suggests that sophisticated investors have evaluated and rejected Relic Technologies as an investment opportunity.

Relic Technologies' contemplated diversification into pharmaceutical activities under a proposed name change to "Relic Life Science Ltd." adds another layer of uncertainty. For a company struggling to achieve profitability in its core brokerage business, venturing into an entirely different industry raises serious questions about management's strategic focus and execution capabilities.

Peer Comparison: Valuation Premium Without Justification

Relic Technologies trades at a price-to-book value (P/BV) of 4.24x, significantly higher than most peers despite generating the third-lowest ROE in the group at 3.74%. This valuation premium appears entirely unjustified given the company's negative profitability trends. Profitable peers like AD Manum Finance (ROE: 8.37%) and Glance Finance (ROE: 4.20%) trade at P/BV multiples of 0.46x and 0.74x respectively, suggesting Relic Technologies is overvalued by a factor of five to ten times relative to its fundamental quality.

The comparison becomes even more stark when examining Nagreeka Capital, which delivers an exceptional 124.35% ROE yet trades at just 1.79x book value—less than half Relic Technologies' multiple. This peer analysis conclusively demonstrates that Relic Technologies' current valuation reflects speculative trading dynamics rather than rational assessment of its earnings power or growth prospects.

Valuation Analysis: Risky Premium for a Loss-Making Entity

With a loss-making profile rendering traditional P/E ratios meaningless, Relic Technologies' valuation must be assessed through alternative metrics. The EV/EBITDA multiple of -10.34x reflects the company's negative EBITDA generation, whilst the EV/Sales ratio of 13.05x appears extraordinarily elevated for an NBFC generating minimal revenues and consistent losses.

The company's valuation grade has oscillated between "Risky" and "Very Expensive" over the past several months, with the current "Risky" classification accurately capturing the speculative nature of the investment proposition. The 52-week trading range of ₹38.89 to ₹93.96 demonstrates extreme volatility, with the current price of ₹81.00 positioned 108.28% above the year's low but 13.79% below the high.

Stock Performance: Speculative Gains Mask Fundamental Weakness

The stock's extraordinary returns over multiple timeframes—104.24% over one year, 342.62% over two years, and 309.09% over three years—stand in stark contrast to the company's deteriorating operational performance. This divergence represents a classic case of price action disconnected from fundamentals, driven by the stock's micro-cap status and thin trading volumes that enable large percentage moves on minimal capital flows.

The stock's beta of 1.50 classifies it as high beta, meaning it exhibits 50% more volatility than the broader market. Combined with a volatility reading of 48.40%—more than four times the Sensex's 11.44%—Relic Technologies presents extreme risk characteristics. The technical trend classification of "Mildly Bullish" provides little comfort given the fundamental deterioration, as technical momentum can reverse rapidly when underlying business quality is questioned.

Investment Thesis: All Four Pillars Signal Caution

Examining the proprietary Mojo 4 Dots framework reveals uniformly concerning signals across all critical parameters. The company's overall score of 33 out of 100 places it firmly in "SELL" territory, with the recommendation to consider selling and look for exit opportunities.

Near-Term Drivers (NEUTRAL): The quarterly financial trend is classified as "Flat," though this understates the severity of Q3 FY26's performance. Technical indicators show "Mildly Bullish" momentum, but this provides scant support given the fundamental challenges.

Quality (BELOW AVERAGE): The quality grade accurately reflects the company's weak long-term financial performance, with operating losses and an average ROE of just 3.74% over five years. The five-year EBIT growth of -222.78% demonstrates consistent value destruction.

Valuation (RISKY): The valuation assessment appropriately flags the elevated multiples relative to the company's loss-making status and weak fundamentals. The P/BV of 4.24x for a company destroying shareholder value represents a significant valuation risk.

Overall Assessment (CAUTIOUS): The framework's "CAUTIOUS" overall assessment reflects mixed signals, though in reality, the signals are uniformly negative when properly weighted for the severity of operational challenges.

Key Strengths & Risk Factors

Outlook: Critical Monitoring Points

The company's ability to survive depends entirely on immediate and dramatic cost restructuring. With quarterly revenues of just ₹0.32 crores unable to support employee costs of ₹1.26 crores, the current trajectory leads to inevitable cash depletion despite the current asset cushion. Management must demonstrate decisive action to right-size the cost base within the next quarter, or the company faces an existential crisis.

Investors should monitor Q4 FY26 results (January-March 2026) with particular scrutiny. Any failure to reduce employee costs below ₹0.50 crores or generate revenues above ₹0.80 crores would signal management's inability or unwillingness to address the fundamental operational challenges. Similarly, the absence of concrete progress on the pharmaceutical diversification strategy would raise questions about whether this represents a genuine strategic pivot or merely aspirational planning.