Sanmit Infra Q2 FY26: Steep Revenue Decline Triggers Losses as Oil Services Firm Struggles

The results triggered further weakness in the stock, which closed at ₹8.85 on November 14, 2025, down 1.78% from the previous session. The company's shares have been under sustained pressure, declining 30.53% over the past year and underperforming the Sensex by a staggering 39.53 percentage points during the same period.

The dramatic revenue collapse represents the most severe quarterly contraction in the company's recent history, with sales falling from ₹39.01 crores in Q1 FY26 to just ₹7.07 crores in Q2 FY26. On a year-on-year basis, the decline was equally alarming at 82.34%, indicating systemic challenges rather than seasonal fluctuations. This sharp drop in topline has raised questions about project execution, client retention, and the company's competitive positioning in the oil services sector.

Financial Performance: Revenue Collapse Drives Deep Losses

The Q2 FY26 quarter witnessed a complete breakdown in Sanmit Infra's financial performance across all key metrics. Net sales of ₹7.07 crores represented the lowest quarterly revenue in the company's recent operational history, falling precipitously from ₹39.01 crores in Q1 FY26. This 81.88% sequential decline was accompanied by an equally severe 82.34% year-on-year contraction, suggesting fundamental challenges in the company's business model or market environment.

The operating profit before depreciation, interest, and tax (PBDIT) excluding other income turned deeply negative at ₹-0.81 crores, compared to a positive ₹1.99 crores in the previous quarter. This translated to an operating margin of -11.46%, the worst performance in recent quarters and a stark reversal from the 5.10% margin achieved in Q1 FY26. The margin deterioration reflects not just lower revenues but also the company's inability to adjust its cost structure quickly enough to match the revenue decline.

The profit after tax swung to a loss of ₹1.17 crores from a profit of ₹0.94 crores in Q1 FY26, representing a 291% deterioration compared to the previous four-quarter average. The PAT margin collapsed to -16.55%, indicating that losses exceeded one-sixth of the company's meagre revenues. Employee costs remained relatively stable at ₹0.74 crores, but fixed costs such as depreciation (₹0.62 crores) and interest (₹0.26 crores) continued to weigh on profitability despite the revenue shortfall.

Operational Challenges: The Revenue Drought Deepens

The catastrophic revenue decline in Q2 FY26 points to severe operational difficulties at Sanmit Infra. The company's inability to maintain even a fraction of its previous quarter's revenue suggests potential issues with project pipeline, client relationships, or contract execution. In the oil services sector, such dramatic revenue fluctuations typically indicate lumpy project-based revenues, loss of key contracts, or delays in project commencement.

From a capital efficiency perspective, the company's return on equity (ROE) has averaged 13.50% over recent years, which whilst positive, remains modest for a company operating in the capital-intensive oil services sector. The latest ROE of 6.68% reflects the deteriorating profitability and suggests that the company is struggling to generate adequate returns for its shareholders. The return on capital employed (ROCE) averaged 14.68% historically but has fallen to just 6.85% in the most recent period, indicating declining operational efficiency.

The balance sheet shows total shareholder funds of ₹36.67 crores as of March 2025, with minimal long-term debt of ₹0.09 crores. Whilst the low leverage provides some financial flexibility, the company's current assets of ₹50.47 crores are offset by current liabilities of ₹23.62 crores, leaving a working capital cushion of approximately ₹27 crores. Trade payables increased significantly to ₹14.77 crores from ₹4.39 crores in the previous year, suggesting potential pressure on supplier payments or stretched working capital management.

Industry Context: Navigating a Challenging Oil Services Environment

Sanmit Infra operates in the oil services sector, which has faced headwinds from volatile crude oil prices, fluctuating capital expenditure by oil and gas companies, and increasing competition. The company's dramatic revenue decline in Q2 FY26 appears to be company-specific rather than industry-wide, as broader oil sector metrics have shown relative stability during this period.

The company's five-year sales growth rate of 28.45% and EBIT growth of 19.48% demonstrate historical growth capability, but recent quarters suggest this momentum has stalled significantly. The FY25 annual results showed net sales of ₹142.00 crores with a profit after tax of just ₹1.00 crore, yielding a meagre PAT margin of 0.70%. This weak full-year performance, followed by the Q2 FY26 collapse, suggests structural challenges rather than temporary disruptions.

The company's average debt-to-EBITDA ratio of 1.02 and net debt-to-equity ratio of 0.22 indicate conservative leverage, which provides some cushion during difficult operating periods. However, the EBIT-to-interest coverage ratio of 5.52 times, whilst adequate, has likely deteriorated significantly given the recent losses. The sales-to-capital employed ratio of 3.46 times suggests moderate asset efficiency, though this metric's relevance diminishes when revenues collapse as dramatically as they have in Q2 FY26.

Peer Comparison: Valuation Premium Unjustified by Fundamentals

When compared to its peers in the oil services sector, Sanmit Infra's valuation metrics appear stretched relative to its operational performance. The company trades at a price-to-earnings ratio of 57.08 times trailing twelve-month earnings, significantly higher than most comparable companies in the sector. This elevated multiple appears unjustified given the recent deterioration in financial performance and the company's micro-cap status.

Sanmit Infra's price-to-book value ratio of 3.81 times stands well above the peer average of approximately 1.30 times, suggesting the market has been pricing in growth expectations that recent results have failed to deliver. The company's ROE of 13.50% is respectable but not exceptional compared to peers like DHP India (17.76%) and Greenhitech Ventures (17.33%), making the valuation premium difficult to justify.

The company's minimal debt-to-equity ratio of 0.22 compares favourably with most peers and provides financial flexibility, but this conservative capital structure alone cannot support the current valuation multiples. With a market capitalisation of just ₹145.00 crores, Sanmit Infra ranks sixth amongst its peer group, reflecting its micro-cap status and limited institutional following.

Valuation Analysis: Expensive Multiples Amid Deteriorating Fundamentals

Sanmit Infra's current valuation appears disconnected from its underlying financial performance. Trading at ₹8.85 per share as of November 14, 2025, the stock carries a P/E ratio of 57.08 times, which seems excessively rich for a company that just reported a quarterly loss and has shown extreme revenue volatility. The price-to-book value of 3.81 times suggests investors are paying nearly four times the company's net asset value, a premium typically reserved for high-growth, high-return businesses.

The enterprise value-to-EBITDA multiple of 21.67 times and EV-to-EBIT of 35.74 times further underscore the stretched valuation. These multiples imply strong earnings visibility and growth prospects, which recent results have clearly contradicted. The EV-to-sales ratio of 0.90 times, whilst more reasonable, must be viewed in the context of the company's inability to convert revenues into consistent profits.

The stock's valuation grade has oscillated between "Expensive" and "Fair" in recent months, currently settling on "Expensive" as of November 3, 2025. This assessment appears appropriate given the disconnect between valuation multiples and operational performance. The company's book value per share of ₹2.32 provides some downside support, but the current market price of ₹8.85 implies substantial optimism about future recovery that may not be warranted by recent trends.

Shareholding Pattern: Stable Promoter Base, Zero Institutional Interest

The shareholding pattern of Sanmit Infra has remained remarkably stable over recent quarters, with promoters holding a consistent 72.33% stake since at least September 2024. This unchanging promoter holding suggests confidence in the long-term prospects, though it also indicates no recent capital infusion or stake adjustments despite the operational challenges.

The complete absence of foreign institutional investors (FIIs), mutual funds, insurance companies, and other domestic institutional investors highlights the stock's micro-cap status and limited liquidity. The 27.67% non-institutional holding has remained static, suggesting minimal trading activity and poor liquidity. This lack of institutional interest reflects the company's small size, inconsistent financial performance, and limited analyst coverage.

Positively, there is no promoter pledging, indicating the promoters are not using their shares as collateral for borrowing. The key promoters—Kamal K Makhija, Dinesh Kanayalal Makhija, Haresh K. Makhija, and Sanjay K. Makhija—each hold approximately 17.94-17.96% stakes, suggesting a closely held family business structure. This concentrated ownership can be a double-edged sword: it aligns promoter interests with shareholders but also limits governance oversight and transparency.

Stock Performance: Severe Underperformance Across All Timeframes

Sanmit Infra's stock performance has been dismal across virtually all timeframes, with the shares consistently underperforming both the benchmark Sensex and its own sector. Trading at ₹8.85 as of November 14, 2025, the stock has declined 1.78% in the latest session and is down 3.07% over the past week. The one-month return of -3.80% compares poorly with the Sensex's gain of 3.09%, resulting in a negative alpha of -6.89%.

The longer-term picture is even more concerning. Over the past year, Sanmit Infra has declined 30.53% whilst the Sensex gained 9.00%, resulting in a massive negative alpha of -39.53%. The stock has also underperformed its oil sector peers by 33.12%, with the sector posting a positive return of 2.59% over the same period. This consistent underperformance suggests company-specific issues rather than sector-wide challenges.

The two-year and three-year returns paint a catastrophic picture, with the stock down 87.69% and 87.82% respectively, whilst the Sensex posted gains of 30.23% and 37.22%. The stock currently trades below all its key moving averages—the 5-day (₹9.09), 20-day (₹9.15), 50-day (₹9.28), 100-day (₹9.71), and 200-day (₹9.95) averages—indicating a sustained downtrend with no technical support in sight.

The stock's beta of 1.50 indicates it is 50% more volatile than the broader market, classified as a "High Beta" stock. This high volatility, combined with negative returns, places Sanmit Infra in the "HIGH RISK LOW RETURN" category with a risk-adjusted return of -0.89 over the past year. The stock's volatility of 34.28% is nearly three times higher than the Sensex's 12.26%, reflecting the extreme price swings characteristic of micro-cap stocks with poor liquidity.

Investment Thesis: Multiple Red Flags Outweigh Limited Positives

The investment case for Sanmit Infra has deteriorated significantly following the Q2 FY26 results. The company's proprietary Mojo Score stands at just 42 out of 100, firmly in "SELL" territory, reflecting the multiple challenges facing the business. The financial trend is classified as "NEGATIVE," with the quarterly results showing the lowest revenue, operating profit, and profit before tax in recent history.

The technical trend is classified as "MILDLY BEARISH," with the stock trading below all major moving averages and showing consistent negative momentum. The quality grade has been downgraded to "AVERAGE" from "GOOD" in recent months, reflecting the deteriorating financial performance and operational challenges. The valuation remains "EXPENSIVE" despite the recent price decline, as the company's P/E ratio of 57.08 times appears unjustified given the loss-making recent quarter.

The company's average ROCE of 14.68% and ROE of 13.50% are modest but acceptable for the sector. However, these averages mask the recent deterioration, with the latest ROCE at just 6.85% and ROE at 6.68%. The five-year sales growth rate of 28.45% demonstrates historical capability, but the recent revenue collapse raises serious questions about the sustainability of this growth trajectory.

Key Strengths & Risk Factors

Outlook: Critical Monitoring Points for Recovery Assessment

The outlook for Sanmit Infra remains highly uncertain, with the Q2 FY26 results raising fundamental questions about the company's business model and operational sustainability. Investors should closely monitor several critical factors in the coming quarters to assess whether the company can stage a recovery or if the deterioration represents a more permanent structural challenge.