The Mumbai-based logistics company, with a market capitalisation of ₹584.20 crores, has demonstrated exceptional operational momentum in the September 2025 quarter. Sequential growth was equally impressive, with net profit advancing 27.07% quarter-on-quarter from ₹14.26 crores in Q1 FY26. This marks the seventh consecutive quarter of profitability expansion, underscoring the company's ability to capitalise on India's growing logistics infrastructure.
For the first half of FY2026 (H1 FY26), S J Logistics reported consolidated net profit of ₹32.38 crores on revenues of ₹282.90 crores, representing robust year-on-year growth as the company scales its operations. The performance comes against the backdrop of a challenging stock market environment, where the shares have declined 40.11% year-to-date, significantly underperforming the Sensex's 7.64% gain during the same period.
Quarterly Performance Trend: Consistent Acceleration
| Quarter | Revenue (₹ Cr) | QoQ Growth | Net Profit (₹ Cr) | QoQ Growth | Operating Margin |
|---|---|---|---|---|---|
| Sep'25 | 157.14 | +24.95% | 18.12 | +27.07% | 18.09% |
| Jun'25 | 125.76 | -11.27% | 14.26 | -3.91% | 17.67% |
| Mar'25 | 141.73 | +4.33% | 14.84 | +4.43% | 16.42% |
| Dec'24 | 135.85 | +9.38% | 14.21 | +11.71% | 14.97% |
| Sep'24 | 124.20 | +23.32% | 12.72 | +18.55% | 14.18% |
| Jun'24 | 100.71 | +13.75% | 10.73 | +50.70% | 14.03% |
| Mar'24 | 88.54 | — | 7.12 | — | 8.61% |
Financial Performance: Margin Expansion Drives Profitability
S J Logistics' Q2 FY26 results showcase impressive operational efficiency gains alongside top-line growth. Revenue of ₹157.14 crores in the September quarter represents the company's highest-ever quarterly sales figure, marking a 24.95% sequential increase from Q1 FY26's ₹125.76 crores. The year-on-year comparison reveals even stronger momentum, with revenue climbing 26.52% from ₹124.20 crores in the corresponding quarter of the previous year.
Operating profit before depreciation, interest, tax and other income (PBDIT excluding OI) reached ₹28.42 crores in Q2 FY26, translating to an operating margin of 18.09%. This represents a significant 391 basis points expansion from the 14.18% margin recorded in September 2024, and marks the highest operating margin achieved by the company in recent quarters. The sequential improvement of 42 basis points from Q1 FY26's 17.67% margin demonstrates sustained operational leverage.
Profit before tax surged to ₹23.30 crores in Q2 FY26, up 41.48% year-on-year from ₹16.47 crores, whilst the profit after tax margin expanded to 11.53% from 10.24% in the year-ago quarter. The company maintained a stable tax rate of 22.19%, consistent with its historical effective tax rate of approximately 22-23%.
The company's full-year FY2025 performance provides context for this growth trajectory. Annual revenue reached ₹502.00 crores, an 85.90% increase from ₹270.00 crores in FY2024. Net profit for FY2025 stood at ₹52.00 crores, more than doubling from ₹22.00 crores in the previous fiscal year. This exceptional growth has been driven by expanding operating margins, which improved from 10.70% in FY2024 to 14.90% in FY2025.
The Interest Cost Challenge: A Growing Concern
Whilst operational performance remains robust, a critical pressure point has emerged in the form of escalating interest costs. Interest expense in Q2 FY26 surged to ₹3.71 crores, representing a substantial 321.59% year-on-year increase from ₹0.88 crores in September 2024. The sequential increase was equally dramatic, jumping 30.18% from ₹2.85 crores in Q1 FY26.
Critical Monitoring Point: Deteriorating Interest Coverage
The operating profit to interest coverage ratio has declined sharply to 7.66 times in Q2 FY26, marking the lowest level in recent quarters. This represents a significant deterioration from the 20.01 times coverage recorded in September 2024, raising questions about the company's debt servicing capacity as it expands operations.
This surge in interest costs reflects the company's aggressive capital expenditure programme and working capital requirements to support rapid revenue growth. Long-term debt on the balance sheet increased substantially to ₹45.13 crores as of March 2025, up from ₹7.49 crores a year earlier. The company's debt-to-EBITDA ratio stands at 1.38, whilst net debt to equity is relatively modest at 0.27, suggesting the leverage remains manageable despite the recent increase.
Depreciation costs have also risen, reaching ₹1.51 crores in Q2 FY26 compared to ₹0.36 crores in the year-ago quarter, reflecting investments in fixed assets which grew to ₹41.49 crores as of March 2025 from ₹4.42 crores in March 2024. Employee costs remained well-controlled at ₹3.27 crores in Q2 FY26, up 53.52% year-on-year but representing just 2.08% of revenue.
Capital Efficiency: Strong Returns Despite Leverage Increase
S J Logistics continues to demonstrate impressive capital efficiency metrics that underscore the quality of its business model. The company's return on equity (ROE) stands at a robust 24.14%, significantly higher than the transport services sector average and indicative of effective capital deployment. This strong ROE is particularly noteworthy given the company's recent capital-raising activities, which saw equity capital increase to ₹15.24 crores as of March 2025 from ₹14.48 crores a year earlier.
Return on capital employed (ROCE) reached 26.39% in the latest period, reflecting efficient utilisation of both equity and debt capital. The company's average ROCE over recent years stands at 21.21%, demonstrating consistent performance above most industry peers. This strong capital efficiency, combined with a sales-to-capital-employed ratio of 1.93, indicates that S J Logistics is generating healthy revenue multiples on its invested capital base.
The balance sheet reveals shareholder funds of ₹217.46 crores as of March 2025, more than doubling from ₹112.04 crores a year earlier. Reserves and surplus grew to ₹193.87 crores from ₹97.56 crores, reflecting retained earnings from the company's profitable operations. Current assets expanded to ₹235.56 crores from ₹122.92 crores, supporting the higher operational scale, whilst current liabilities increased modestly to ₹33.65 crores from ₹29.53 crores.
Working Capital Dynamics: Growth-Driven Cash Consumption
The company's cash flow statement for FY2025 reveals a working capital-intensive growth model. Despite generating ₹68.00 crores in profit before tax, changes in working capital consumed ₹119.00 crores, resulting in negative operating cash flow of ₹51.00 crores. This pattern, whilst concerning from a cash generation perspective, is typical of rapidly scaling logistics businesses that must invest in inventory, receivables, and operational infrastructure ahead of revenue realisation.
Peer Comparison: Valuation Advantage Amidst Quality Performance
| Company | P/E (TTM) | P/BV | ROE (%) | Debt/Equity | Market Cap (₹ Cr) |
|---|---|---|---|---|---|
| S J Logistics | 9.92 | 2.80 | 24.14 | 0.27 | 584 |
| Glottis | 12.13 | — | — | — | — |
| Sical Logistics | NA (Loss Making) | -128.04 | 3.22 | -109.29 | — |
| Tara Chand Infra | 22.52 | 4.49 | 14.43 | 0.75 | — |
| ABS Marine | 22.42 | 2.53 | 11.58 | 0.05 | — |
| Transworld Shipping | 170.82 | 0.68 | 12.59 | 0.28 | — |
S J Logistics trades at a price-to-earnings ratio of 9.92 times trailing twelve-month earnings, representing a significant discount to most comparable companies in the transport services sector. Tara Chand Infra and ABS Marine trade at P/E multiples above 22, whilst Transworld Shipping commands an eye-watering 170.82 times earnings, highlighting S J Logistics' relative valuation attractiveness.
The company's 24.14% ROE substantially exceeds the peer group average, with only Tara Chand Infra's 14.43% and ABS Marine's 11.58% coming within reasonable comparison range. This superior return on equity, combined with the attractive valuation multiple, suggests S J Logistics offers compelling value relative to operational quality. The price-to-book ratio of 2.80 times sits in the middle of the peer range, appearing reasonable given the strong ROE profile.
S J Logistics' debt-to-equity ratio of 0.27 remains conservative compared to Tara Chand Infra's 0.75, indicating prudent financial management despite the recent increase in leverage. The company's market capitalisation of ₹584.20 crores positions it as the fourth-largest player amongst the peer group, reflecting its micro-cap status and potential for further scale expansion.
Valuation Analysis: Attractive Entry Point Marred by Technical Weakness
At the current market price of ₹382.00, S J Logistics trades at what appears to be an attractive valuation on fundamental metrics. The company's P/E ratio of 9.92 times represents a significant discount to its historical averages and peer group multiples. The enterprise value to EBITDA multiple of 7.10 times and EV to EBIT of 7.44 times further underscore the valuation appeal, particularly given the company's strong growth trajectory and improving margins.
The PEG ratio of 0.08 suggests the stock is trading at a substantial discount to its growth rate, with the five-year sales growth of 83.70% and EBIT growth of 144.58% far exceeding the valuation multiple. The company's valuation grade has been classified as "Very Attractive" since June 2025, having improved from "Attractive" and earlier periods of being deemed "Expensive" or "Very Expensive" when the stock traded at higher levels.
However, the stock's technical picture presents a stark contrast to its fundamental valuation appeal. Trading 47.31% below its 52-week high of ₹725.00 and just 26.89% above its 52-week low of ₹301.05, the shares remain in a "Mildly Bearish" technical trend. The stock trades below all key moving averages, including the 5-day (₹343.17), 20-day (₹349.98), 50-day (₹377.67), 100-day (₹403.09), and 200-day (₹463.63) averages, indicating sustained selling pressure.
The disconnect between attractive fundamental valuation and weak technical momentum reflects broader investor concerns about the company's ability to sustain its growth trajectory whilst managing rising interest costs and working capital requirements. The stock's high beta of 1.50 suggests it is 50% more volatile than the broader market, amplifying both upside and downside moves.
Shareholding Pattern: Stable Promoter Base with Limited Institutional Interest
| Shareholder Category | Sep'25 | Jun'25 | Mar'25 | QoQ Change |
|---|---|---|---|---|
| Promoter Holding | 49.10% | 48.76% | 47.95% | +0.34% |
| FII Holding | 0.24% | 0.24% | 0.25% | 0.00% |
| Mutual Fund Holding | 0.00% | 0.00% | 0.00% | 0.00% |
| Other DII Holdings | 2.19% | 2.02% | 2.02% | +0.17% |
| Non-Institutional | 48.47% | 48.99% | 49.77% | -0.52% |
S J Logistics' shareholding structure reveals a stable promoter base holding 49.10% as of September 2025, with promoter holding gradually increasing from 47.95% in March 2025. The promoter group, led by Rajen Hasmukhlal Shah with 36.91%, has demonstrated commitment to the company with zero pledging of shares, a positive indicator of confidence in the business.
However, institutional participation remains notably limited. Foreign institutional investors hold a minimal 0.24%, whilst mutual funds have zero exposure to the stock. Other domestic institutional investors (DIIs) have marginally increased their stake to 2.19% from 2.02% in the previous quarter, representing the only meaningful institutional interest. The total institutional holding of just 2.43% suggests the stock remains largely off the radar of professional investors, likely due to its micro-cap status and limited liquidity.
The non-institutional shareholding of 48.47% represents retail and other non-classified investors. The sequential decline of 52 basis points in this category during Q2 FY26 suggests some retail profit-booking or exit activity, possibly contributing to the stock's price weakness despite strong operational results.
Stock Performance: Severe Underperformance Across All Timeframes
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | +13.89% | +1.07% | +12.82% |
| 1 Month | +3.52% | +2.53% | +0.99% |
| 3 Months | +4.02% | +4.35% | -0.33% |
| 6 Months | -27.10% | +3.41% | -30.51% |
| Year-to-Date | -40.11% | +7.64% | -47.75% |
| 1 Year | -43.65% | +8.41% | -52.06% |
The stock's performance presents a tale of two narratives: recent recovery versus sustained underperformance. Over the past week, S J Logistics shares have surged 13.89%, significantly outperforming the Sensex's 1.07% gain and generating positive alpha of 12.82%. The one-month return of 3.52% also marginally exceeds the benchmark's 2.53% gain, suggesting some near-term momentum building.
However, extending the timeframe reveals severe underperformance. The six-month return of -27.10% compares unfavourably to the Sensex's 3.41% gain, resulting in negative alpha of 30.51 percentage points. Year-to-date, the stock has declined 40.11% against the Sensex's 7.64% advance, whilst the one-year return of -43.65% versus the benchmark's 8.41% gain represents an alpha of -52.06 percentage points.
Compared to the transport services sector's one-year return of -15.31%, S J Logistics has underperformed by 28.34 percentage points, suggesting company-specific concerns beyond broader sectoral headwinds. The stock's risk-adjusted return of -0.81 over one year, combined with high volatility of 53.90%, places it in the "HIGH RISK LOW RETURN" category, a concerning classification for risk-conscious investors.
"Despite delivering 42% profit growth and expanding margins to record levels, S J Logistics shares have tumbled 44% over the past year—a stark reminder that operational excellence alone cannot overcome valuation concerns and technical weakness in micro-cap stocks."
Investment Thesis: Quality Operations Meet Valuation Uncertainty
S J Logistics presents a complex investment case characterised by strong operational fundamentals juxtaposed against concerning technical trends and rising financial costs. The company's proprietary investment score of 45 out of 100 results in a "SELL" rating, reflecting the multiple headwinds facing the stock despite attractive fundamental valuation.
The company's quality assessment has been downgraded to "Average" from "Good" in recent quarters, reflecting concerns about the sustainability of growth amidst rising leverage and deteriorating interest coverage. Whilst the five-year sales CAGR of 83.70% and EBIT growth of 144.58% demonstrate exceptional historical performance, the financial trend for the latest quarter is classified as "Flat" despite the strong absolute numbers.
The technical assessment remains "Mildly Bearish," with the stock trading below all major moving averages and showing sustained selling pressure. Multiple technical indicators, including RSI, moving averages, and on-balance volume (OBV), signal bearish or mildly bearish trends, suggesting limited near-term upside despite the fundamental value proposition.
Key Strengths & Risk Factors
KEY STRENGTHS
- Robust Revenue Growth: 26.52% YoY revenue expansion in Q2 FY26 demonstrates strong market demand and operational scaling capability.
- Margin Expansion: Operating margin improved to 18.09%, up 391 bps YoY, reflecting operating leverage and cost efficiency gains.
- Strong ROE Profile: ROE of 24.14% significantly exceeds sector averages, indicating superior capital efficiency and profitability.
- Attractive Valuation: P/E of 9.92x and PEG ratio of 0.08x suggest the stock trades at a substantial discount to growth and peers.
- Zero Promoter Pledging: Promoter stake of 49.10% with no pledging demonstrates management confidence and financial stability.
- Consistent Profitability: Seven consecutive quarters of profit growth showcase sustainable business model and execution capability.
- Conservative Leverage: Net debt-to-equity of 0.27 remains manageable despite recent debt increase to fund growth.
KEY CONCERNS
- Surging Interest Costs: Interest expense jumped 321.59% YoY to ₹3.71 crores, significantly impacting profitability and coverage ratios.
- Deteriorating Interest Coverage: Operating profit to interest coverage declined to 7.66 times from 20.01 times, raising debt servicing concerns.
- Negative Operating Cash Flow: FY2025 operating cash flow of -₹51.00 crores despite ₹68.00 crores PBT highlights working capital intensity.
- Severe Stock Underperformance: 43.65% decline over one year with negative alpha of 52.06 percentage points versus Sensex.
- Weak Technical Picture: Mildly bearish trend with stock trading below all major moving averages signals continued selling pressure.
- Limited Institutional Interest: Just 2.43% institutional holding suggests lack of professional investor confidence and liquidity constraints.
- High Volatility: Beta of 1.50 and volatility of 53.90% classify the stock as high-risk with amplified downside potential.
Outlook: What to Watch
POSITIVE CATALYSTS
- Sustained Margin Expansion: Continued improvement in operating margins above 18% would validate operating leverage thesis.
- Stabilising Interest Costs: Flattening or reduction in interest expense growth as debt servicing normalises post-capex cycle.
- Institutional Entry: Any meaningful mutual fund or FII accumulation could trigger re-rating and improve liquidity.
- Technical Reversal: Break above ₹403.09 (100 DMA) would signal potential trend reversal and attract momentum investors.
- Improved Cash Generation: Positive operating cash flow in coming quarters would address working capital concerns.
RED FLAGS TO MONITOR
- Further Interest Coverage Decline: Coverage ratio falling below 7x would raise serious debt servicing concerns.
- Margin Compression: Any reversal in operating margin trajectory below 16% would undermine growth quality thesis.
- Continued Cash Burn: Persistent negative operating cash flow beyond FY2026 would strain balance sheet flexibility.
- Technical Breakdown: Fall below ₹301.05 (52-week low) would trigger further selling and test ₹250-270 support levels.
- Promoter Stake Reduction: Any decline in promoter holding below 48% would signal lack of confidence.
The Verdict: Operational Excellence Insufficient to Overcome Multiple Headwinds
Score: 45/100
For Fresh Investors: Avoid initiating positions at current levels. Whilst the fundamental valuation appears attractive and operational performance remains strong, the combination of surging interest costs, negative operating cash flow, weak technical momentum, and severe stock underperformance presents excessive risk. The lack of institutional support and high volatility (53.90%) make this unsuitable for conservative investors. Consider waiting for stabilisation in interest coverage ratios and technical trend reversal above ₹403 before evaluation.
For Existing Holders: Consider reducing exposure on any near-term rallies towards ₹400-420 levels. Whilst the company's operational fundamentals and growth trajectory remain intact, the deteriorating interest coverage (7.66 times), persistent cash flow challenges, and bearish technical setup suggest further downside risk. The 43.65% one-year decline may not have fully discounted the structural concerns. Maintain strict stop-loss below ₹300 to limit further capital erosion.
Fair Value Estimate: ₹350-380 based on current operational trajectory and interest cost pressures (in line with current price; limited upside)
The disconnect between strong quarterly results and weak stock performance reflects legitimate investor concerns about the sustainability of growth amidst rising financial costs and working capital intensity. Until these structural issues are addressed through improved cash generation and stabilising interest coverage, the stock is likely to remain range-bound with downside bias despite attractive fundamental valuation multiples.
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 is not indicative of future results. The views expressed are based on information available as of November 19, 2025, and are subject to change.
