Sammaan Capital Q3 FY26: Steady Profit Growth Amid Margin Pressure and Volatile Institutional Interest

The December 2025 quarter presented a mixed performance picture for Sammaan Capital. Whilst the company achieved year-on-year profit growth of 3.85%, sequential momentum faltered with net profit rising just 1.82% quarter-on-quarter from ₹308.47 crores in Q2 FY26. More concerning was the 4.13% sequential decline in net interest income to ₹2,157.54 crores, suggesting pressure on the core lending business. The company's profit after tax margin improved to 14.56% from 13.71% in the previous quarter, but this came alongside notable volatility in operating metrics.

For the nine-month period of FY26 (April-December 2025), Sammaan Capital reported cumulative net profit of ₹956.85 crores, representing an 8.44% decline compared to the same period in FY25. This deterioration in nine-month performance, despite quarterly improvements, highlights the challenging operating environment the housing finance sector has navigated through the fiscal year.

Financial Performance: Margin Expansion Masks Revenue Weakness

Sammaan Capital's Q3 FY26 financial performance revealed a divergence between top-line momentum and profitability metrics. Net interest income of ₹2,157.54 crores grew 6.99% year-on-year but contracted 4.13% sequentially from ₹2,250.60 crores in Q2 FY26. This quarter-on-quarter decline followed a previous sequential drop of 6.24%, indicating two consecutive quarters of revenue contraction despite year-on-year growth.

The operating profit before depreciation, interest, and tax (excluding other income) surged to ₹1,897.53 crores in Q3 FY26, representing the highest quarterly figure in the recent period and translating to an exceptional operating margin of 87.95%. This marked a substantial improvement from 76.53% in Q2 FY26 and 80.73% in Q3 FY25. However, this margin expansion appears primarily driven by cost containment rather than revenue growth, with employee costs declining sharply to ₹103.48 crores from ₹201.71 crores in the previous quarter.

Interest expenses increased to ₹1,457.67 crores in Q3 FY26 from ₹1,286.00 crores in Q2 FY26, reflecting a 13.35% sequential rise and indicating higher borrowing costs or increased leverage. The profit before tax stood at ₹419.07 crores, marginally lower than ₹425.03 crores in the previous quarter, with the effective tax rate declining to 25.05% from 27.42%. The net profit after tax margin improved to 14.56% from 13.71% quarter-on-quarter, though it remains below the 15.38% achieved in Q4 FY25.

Capital Efficiency Concerns: Weak ROE Signals Profitability Challenges

Sammaan Capital's return on equity of 5.67% in the latest period represents a critical weakness in the company's financial profile, significantly underperforming the housing finance sector average of approximately 13%. This modest ROE indicates that the company generates just ₹5.67 in profit for every ₹100 of shareholder equity, reflecting poor capital efficiency and limited profitability relative to its equity base. The average ROE over recent periods stands at an even weaker 5.26%, highlighting persistent challenges in generating adequate returns for shareholders.

The company's shareholder funds stood at ₹21,822.45 crores as of March 2025, with share capital of ₹162.70 crores and reserves of ₹21,659.75 crores. However, the company reported a significant loss of ₹1,807 crores for the full year FY25, resulting in a negative PAT margin of 21.00% for that fiscal year. This annual loss followed the massive ₹2,760.72 crore quarterly loss in September 2024, which severely impacted the company's profitability trajectory.

The balance sheet reveals current liabilities of ₹48,832.34 crores as of March 2025, down from ₹53,792 crores in the previous year, indicating deleveraging efforts. The company maintains investments of ₹14,218.99 crores, nearly double the ₹7,488.78 crores held in March 2024, suggesting a strategic shift towards treasury management. Fixed assets remain minimal at ₹125.32 crores, consistent with the asset-light model typical of housing finance companies.

Liquidity Position: Cash Flow Strength Amid Balance Sheet Concerns

Sammaan Capital demonstrated robust cash generation from operations in FY25, with operating cash flow surging to ₹8,771 crores from just ₹140 crores in FY24. This dramatic improvement reflects better working capital management and collection efficiency. However, the nine-month FY26 data shows cash and cash equivalents at ₹4,391.23 crores, marked as the lowest in recent periods, raising questions about liquidity adequacy despite strong operational cash generation.

The company's debt-to-equity ratio of 2.04 indicates moderate leverage for a housing finance company, though higher than some peers like Aptus Value Housing (1.57) and Aadhar Housing Finance (2.55). The absence of long-term debt on the balance sheet as of March 2025 suggests the company relies primarily on short-term borrowings and deposits to fund its loan book, which could present refinancing risks in a rising interest rate environment.

Industry Context: Housing Finance Sector Headwinds

The housing finance sector in India has faced a challenging operating environment characterised by rising funding costs, increased competition from banks offering competitive home loan rates, and regulatory scrutiny on asset quality. Sammaan Capital's 6.43% one-year stock return significantly underperforms the housing finance sector's 31.04% return, indicating company-specific challenges beyond broader industry trends.

The company's long-term growth trajectory reveals deeper concerns. Net sales have contracted at an annual rate of 5.15% over the past five years, whilst operating profit has declined at 6.93% annually. This negative growth trend stands in stark contrast to the broader housing finance sector, which has generally expanded during this period driven by government initiatives promoting affordable housing and urbanisation.

The Reserve Bank of India's evolving regulatory framework for NBFCs, including enhanced capital adequacy requirements and stricter asset classification norms, has impacted the entire housing finance sector. Sammaan Capital's focus on affordable housing through its network of over 200 branches and 8,500+ channel partners positions it in a growing market segment, but execution challenges have prevented the company from capitalising on this opportunity effectively.

Peer Comparison: Valuation Discount Reflects Quality Concerns

Sammaan Capital trades at a significant valuation discount to its housing finance peers, reflecting market concerns about its profitability and growth trajectory. With a price-to-earnings ratio of 9.78x, the company trades below the sector average of approximately 16x and well below premium players like Bajaj Housing Finance (30.75x) and Aadhar Housing Finance (19.69x).

The company's price-to-book value of 0.55x represents the lowest among peers, trading at nearly half the book value. This deep discount typically signals market scepticism about asset quality or future profitability. In contrast, quality players like Bajaj Housing (3.61x P/BV), Aptus Value Housing (2.99x P/BV), and Aadhar Housing Finance (2.98x P/BV) command substantial premiums to book value, reflecting superior return profiles and growth prospects.

The stark difference in return on equity provides context for these valuation disparities. Sammaan Capital's 5.26% ROE compares unfavourably with Aptus Value Housing's 16.20%, Aadhar Housing Finance's 14.33%, and LIC Housing Finance's 12.36%. Even PNB Housing Finance, trading at a comparable P/E of 10.12x, delivers superior ROE of 9.73%. This ROE gap of 700-1000 basis points versus peers justifies the valuation discount and highlights the profitability challenge facing Sammaan Capital.

Valuation Analysis: Attractive Entry Point or Value Trap?

Sammaan Capital's current valuation metrics present a paradox: statistically cheap on traditional multiples but fundamentally challenged on quality parameters. Trading at 9.78x trailing twelve-month earnings and 0.55x book value, the stock appears inexpensive relative to both historical averages and peer group valuations. However, the company's classification as "VERY EXPENSIVE" by proprietary valuation assessment suggests that even these seemingly low multiples may not adequately compensate for underlying business risks.

The PEG ratio of 0.06x appears extraordinarily attractive on the surface, but this metric loses relevance given the company's negative five-year growth trajectory. The EV/EBITDA multiple of 8.20x and EV/Sales of 6.10x trade below sector averages, but these discounts reflect market concerns about earnings quality and sustainability rather than representing compelling value opportunities.

The stock's 52-week range of ₹97.80 to ₹192.90 illustrates significant volatility, with the current price of ₹149.80 positioned 53.17% above the low but 22.34% below the high. This wide trading range reflects uncertainty about the company's fundamental trajectory and suggests that investors should await clearer evidence of sustainable improvement before committing capital.

Shareholding Pattern: Institutional Volatility Signals Uncertainty

The shareholding pattern of Sammaan Capital reveals notable institutional activity and a complete absence of promoter holding, which distinguishes it from most Indian financial services companies. The zero promoter stake reflects the company's transition from its previous avatar as Indiabulls Housing Finance and raises governance considerations for potential investors.

Foreign institutional investors increased their stake substantially in Q3 FY26, rising from 19.05% to 24.94%, representing a significant 5.89 percentage point sequential increase. This marks a reversal from the previous quarter's 5.35 percentage point decline, suggesting opportunistic buying by foreign investors at lower price levels. However, the volatile FII activity pattern—with stakes swinging between 19.05% and 27.41% over recent quarters—indicates tactical trading rather than long-term conviction.

Mutual fund holdings declined sharply from 11.44% to 8.34% in Q3 FY26, a concerning 3.10 percentage point reduction that suggests domestic institutional investors are reducing exposure. This decline is particularly notable given the dramatic surge from 0.42% to 11.44% in Q2 FY26, indicating that the previous quarter's buying proved short-lived. The current 8.34% mutual fund holding, whilst higher than the minimal 0.39-0.42% levels seen in earlier quarters, reflects limited domestic institutional conviction in the stock.

Insurance companies maintain a stable 4.70% stake with minimal quarterly fluctuations, providing some anchor to the institutional base. However, the combined institutional holding of 39.33% remains modest for a company of this size, with non-institutional investors holding a dominant 60.67% stake. The high retail and non-institutional ownership base, combined with zero promoter holding, contributes to elevated stock price volatility and susceptibility to sentiment-driven moves.

Stock Performance: Volatile Returns Reflect Fundamental Uncertainty

Sammaan Capital's stock price performance reveals significant volatility across timeframes, with recent momentum diverging sharply from longer-term trends. The stock delivered a 5.72% return over the past week and gained 0.84% over one month, outperforming the Sensex by 3.93% and 3.11% respectively during these periods. However, this short-term strength follows a brutal three-month decline of 19.51%, during which the stock underperformed the Sensex by 19.94 percentage points.

The six-month return of 18.33% appears impressive, outperforming the Sensex by 14.88 percentage points, but this gain follows the sharp three-month correction and reflects recovery from oversold levels rather than sustained fundamental improvement. The one-year return of 6.43% marginally underperforms the Sensex's 6.66% gain, whilst the stock significantly underperforms its housing finance sector, which delivered 31.04% returns over the same period.

Longer-term performance metrics paint a concerning picture. The two-year return of negative 20.93% compares unfavourably with the Sensex's positive 16.28% return, representing 37.21 percentage points of underperformance. The five-year return of negative 24.37% stands in stark contrast to the Sensex's 65.60% gain, translating to a devastating 89.97 percentage points of underperformance. The ten-year return of negative 74.58% versus the Sensex's 244.38% gain illustrates the severe wealth destruction experienced by long-term shareholders.

The stock's high beta of 1.23 indicates elevated volatility, with price movements 23% more volatile than the broader market. This high-beta characteristic, combined with a volatility measure of 47.14% over the past year, classifies Sammaan Capital as a "HIGH RISK MEDIUM RETURN" investment. The Sharpe ratio remains positive but modest, suggesting that the returns generated do not adequately compensate for the elevated risk profile.

Technical Analysis: Mildly Bullish Trend Faces Key Resistance

Sammaan Capital's technical indicators present a mixed picture, with the overall trend classified as "MILDLY BULLISH" as of February 2, 2026, following a shift from "Sideways" at ₹146.50. The current price of ₹149.80 trades above key support at the 52-week low of ₹97.80 but faces multiple resistance levels that could cap upside momentum in the near term.

The stock trades above its 5-day moving average of ₹147.19 and 20-day moving average of ₹143.47, indicating short-term positive momentum. However, it remains below the 50-day moving average of ₹145.59, 100-day moving average of ₹154.65, and 200-day moving average of ₹140.32, suggesting that medium-term trend remains uncertain. The positioning relative to these moving averages indicates that whilst short-term momentum has improved, the stock has not yet established a convincing uptrend across longer timeframes.

The immediate resistance zone lies at ₹154.65 (100-day moving average), followed by the 52-week high of ₹192.90, which represents a 28.79% upside from current levels. The stock's distance of 22.34% below the 52-week high indicates significant room for recovery if fundamentals improve, but also highlights the magnitude of the recent correction. Support exists at ₹143.47 (20-day moving average area) and ultimately at the 52-week low of ₹97.80, which is 34.70% below current levels.

Delivery volumes have shown interesting patterns, with one-month delivery percentage increasing by 23.89% and one-day delivery surging 48.63% above the five-day average. The trailing one-month average delivery volume of 52.10 lakh shares at 45.79% of total volume compares with 68.45 lakh shares at 40.54% in the previous month. This increase in delivery percentage suggests some accumulation by investors taking longer-term positions, though volumes remain modest relative to the stock's market capitalisation.

Investment Thesis: Quality Concerns Offset Valuation Appeal

Sammaan Capital's investment proposition centres on the tension between attractive statistical valuations and concerning fundamental quality. The company's Mojo Score of 64 out of 100 places it in "HOLD" territory, with the recommendation explicitly stating "Not recommended for fresh buy" whilst suggesting existing holders can continue. This lukewarm assessment reflects the balanced but ultimately cautious view of the company's prospects.

The quality assessment of "AVERAGE" reflects the company's mixed fundamental profile. Whilst institutional holdings of 39.33% provide some validation, the five-year sales decline of 5.15% and EBIT contraction of 6.93% annually raise serious questions about the business model's viability. The average ROE of 5.26% falls well short of the returns investors should expect from financial services companies, particularly in a growing economy with favourable housing finance dynamics.

The positive short-term financial trend, driven by the highest quarterly operating profit and improved operating margin, provides some near-term support. However, this improvement appears more attributable to cost reduction than revenue growth, raising sustainability concerns. The mildly bullish technical trend offers tactical support, but technical momentum alone cannot overcome fundamental challenges without accompanying business improvement.

Outlook: What to Monitor Going Forward

The trajectory for Sammaan Capital hinges on its ability to demonstrate sustained revenue growth whilst maintaining the recent margin improvements. Investors should closely monitor whether the company can reverse its five-year negative growth trend and achieve positive momentum in its core lending business. The housing finance sector's favourable long-term fundamentals provide a supportive backdrop, but company-specific execution will determine whether Sammaan Capital can participate in this growth.

The company's Q4 FY26 results will be particularly important, as they will reveal whether the Q3 margin expansion represents a sustainable trend or a temporary phenomenon driven by one-time cost reductions. Full-year FY26 performance will provide clearer visibility on whether the company has successfully turned the corner from the FY25 losses or whether profitability challenges persist.