With a market capitalisation of ₹1,348 crores and shares trading at ₹12,300.00 as of February 13, 2026, the micro-cap NBFC faces mounting investor concerns over its erratic quarterly performance and weak fundamental metrics. The stock has declined 9.43% over the past year, significantly underperforming the Sensex's 8.83% gain and the NBFC sector's 23.77% return.
The quarter's results underscore the inherent unpredictability in Saraswati Commercial's business model, which centres on investment and trading in securities alongside lending activities. The company's net sales of ₹32.69 crores in Q3 FY26 represent a dramatic 55.39% sequential decline from Q2 FY26's ₹73.28 crores, whilst the year-on-year comparison shows a 172.90% deterioration from negative ₹44.84 crores in Q3 FY25.
Quarterly Performance: Extreme Volatility Raises Red Flags
An analysis of Saraswati Commercial's quarterly trends reveals a pattern of extreme fluctuations that challenge conventional financial forecasting. The company's net sales have swung wildly between positive and negative territory over recent quarters, with Q3 FY26's ₹32.69 crores following Q2 FY26's ₹73.28 crores and Q1 FY26's ₹31.47 crores. This compares starkly with FY25 quarters that posted negative sales figures, including Q4 FY25 at negative ₹26.23 crores and Q3 FY25 at negative ₹44.84 crores.
| Quarter | Net Sales (₹ Cr) | QoQ Change | Net Profit (₹ Cr) | QoQ Change | PAT Margin |
|---|---|---|---|---|---|
| Dec'25 (Q3 FY26) | 32.69 | -55.39% | 24.75 | -58.96% | 75.71% |
| Sep'25 (Q2 FY26) | 73.28 | +132.86% | 60.30 | +155.73% | 82.29% |
| Jun'25 (Q1 FY26) | 31.47 | -219.98% | 23.58 | -202.75% | 74.93% |
| Mar'25 (Q4 FY25) | -26.23 | -41.50% | -22.94 | -41.75% | 87.46% |
| Dec'24 (Q3 FY25) | -44.84 | -157.26% | -39.40 | -162.21% | 87.87% |
| Sep'24 (Q2 FY25) | 78.31 | +14.79% | 63.32 | +20.74% | 80.86% |
| Jun'24 (Q1 FY25) | 68.22 | — | 52.45 | — | 76.88% |
Despite the volatile top-line performance, the company has maintained remarkably high operating margins. Q3 FY26's operating profit margin (excluding other income) stood at 95.72%, whilst the PAT margin reached 75.71%. However, these elevated margins reflect the nature of the company's trading and investment activities rather than operational efficiency in traditional lending operations.
Interest expenses in Q3 FY26 more than doubled sequentially to ₹1.25 crores from ₹0.68 crores in Q2 FY26, suggesting increased borrowing costs or leverage. Employee costs remained stable at ₹0.73 crores, marginally higher than the previous quarter's ₹0.69 crores. Tax expenses declined to ₹5.30 crores from ₹11.48 crores, with the effective tax rate at 17.64% compared to 15.99% in Q2 FY26.
⚠️ Critical Concern: Income Volatility
The wild swings in quarterly net sales—ranging from negative ₹44.84 crores to positive ₹78.31 crores over the past seven quarters—indicate an unpredictable income stream that makes financial planning and valuation extremely challenging. This volatility stems from the mark-to-market nature of securities trading and the timing of investment realisations, creating significant uncertainty for investors seeking stable returns.
Balance Sheet: Strong Capital Base Amidst Low Leverage
Saraswati Commercial's balance sheet as of March 2025 reveals a company with substantial shareholder funds of ₹967.56 crores, comprising share capital of ₹1.10 crores and reserves of ₹966.47 crores. The company operates with zero long-term debt, maintaining a conservative capital structure that provides financial flexibility but may limit growth potential.
Investments form the bulk of the asset base at ₹1,083.92 crores as of March 2025, up from ₹761.93 crores in March 2024, representing a 42.23% year-on-year increase. Current assets stood at ₹1,106.74 crores, whilst fixed assets remain minimal at ₹0.05 crores, consistent with the company's focus on financial investments rather than physical infrastructure.
Current liabilities increased to ₹233.17 crores from ₹127.74 crores, a 82.55% rise that warrants monitoring. Trade payables declined sharply to ₹0.29 crores from ₹13.36 crores, suggesting improved working capital management. With a book value per share of ₹8,755.45 and the stock trading at ₹12,300.00, the price-to-book ratio stands at 1.25x, indicating a modest premium to net asset value.
Profitability Metrics: Weak Returns Undermine Investment Case
The company's return on equity (ROE) of 12.84% on an average basis falls significantly short of investor expectations for financial services companies. The latest quarterly ROE of just 2.01% highlights the impact of volatile earnings on profitability metrics. Return on capital employed (ROCE) stands at a meagre 2.79%, reflecting inefficient capital deployment relative to the asset base.
These profitability indicators position Saraswati Commercial in the "Below Average" quality category, as the company struggles to generate consistent returns on its substantial equity capital. The five-year sales growth of 2.64% and EBIT growth of 11.26% further underscore the lacklustre long-term performance, particularly concerning given the company's investment-focused business model that should theoretically benefit from market appreciation over time.
Peer Comparison: Valuation Premium Unjustified by Fundamentals
When benchmarked against NBFC sector peers, Saraswati Commercial's valuation appears stretched relative to its operational performance. The company trades at a price-to-earnings ratio of 62.36x, significantly higher than Balmer Lawrie Investments' 9.49x and PNB Gilts' 6.01x, though comparable to Ashika Credit's elevated 170.14x multiple.
| Company | P/E (TTM) | P/BV | ROE (%) | Debt/Equity | Div Yield |
|---|---|---|---|---|---|
| Saraswati Commercial | 62.36x | 1.25x | 12.84% | 0.05 | — |
| Ashika Credit | 170.14x | 2.67x | 9.08% | 0.00 | — |
| Balmer Lawrie Inv. | 9.49x | 1.20x | 11.38% | 0.17 | 5.87% |
| Grand Oak Canyon | NA (Loss Making) | 1.86x | 0.96% | -0.52 | — |
| LKP Finance | NA (Loss Making) | 4.33x | 13.44% | 0.10 | — |
| PNB Gilts | 6.01x | 0.89x | 9.63% | 15.13 | 1.24% |
Saraswati Commercial's ROE of 12.84% positions it in the middle of the peer group, superior to Ashika Credit's 9.08% and PNB Gilts' 9.63%, but trailing LKP Finance's 13.44%. However, the price-to-book ratio of 1.25x appears reasonable compared to peers like Ashika Credit (2.67x) and LKP Finance (4.33x), though the lack of dividend yield limits income-oriented investor appeal.
The company's zero institutional holdings—with no FII, mutual fund, or insurance company participation—signals weak institutional confidence and raises concerns about governance, transparency, and growth prospects. This stands in stark contrast to larger NBFCs that typically attract significant institutional interest.
Valuation Analysis: Expensive Relative to Fundamentals
At the current market price of ₹12,300.00, Saraswati Commercial trades at multiples that appear disconnected from its operational reality. The P/E ratio of 62.36x represents a substantial premium to the NBFC sector average of 23x, whilst the EV/EBITDA multiple of 45.14x and EV/Sales ratio of 38.80x further underscore the stretched valuation.
The company's valuation grade has oscillated between "Fair" and "Expensive" over recent months, currently settling at "Fair" as of October 2025. However, this assessment appears generous given the weak profitability metrics, volatile earnings pattern, and absence of institutional validation. The 52-week price range of ₹9,215.00 to ₹17,889.80 illustrates the stock's high volatility, with the current price sitting 31.25% below the peak.
Valuation Dashboard
P/E Ratio (TTM): 62.36x (2.7x sector average)
Price to Book Value: 1.25x
EV/EBITDA: 45.14x
Dividend Yield: Nil
Overall Assessment: Expensive relative to fundamentals and peer group
Shareholding Pattern: Promoter-Dominated with Zero Institutional Interest
Promoter holdings have remained stable at 73.99% over the past four quarters (June 2025 to December 2025), following a 1.67 percentage point increase in March 2025 from 72.32% in December 2024. The promoter group comprises multiple entities including Winro Commercial (India) Ltd. (22.77%), Four Dimensions Securities (India) Ltd. (18.78%), and various members of the Kothari family holding smaller stakes.
| Quarter | Promoter | FII | Mutual Funds | Insurance | Non-Institutional |
|---|---|---|---|---|---|
| Dec'25 | 73.99% | 0.00% | 0.00% | 0.00% | 26.01% |
| Sep'25 | 73.99% | 0.00% | 0.00% | 0.00% | 26.01% |
| Jun'25 | 73.99% | 0.00% | 0.00% | 0.00% | 26.01% |
| Mar'25 | 73.99% (+1.67%) | 0.00% | 0.00% | 0.00% | 26.01% |
| Dec'24 | 72.32% | 0.00% | 0.00% | 0.00% | 27.68% |
The complete absence of foreign institutional investors, domestic mutual funds, and insurance companies represents a significant red flag. Institutional investors typically conduct rigorous due diligence before committing capital, and their universal avoidance of Saraswati Commercial suggests concerns about business model sustainability, governance practices, or growth visibility. The non-institutional shareholding of 26.01% comprises primarily retail investors who may lack the resources for comprehensive analysis.
Positively, there is no promoter pledging of shares, indicating financial stability within the promoter group. However, the lack of institutional participation severely constrains liquidity, with daily trading volumes often in single digits, making it difficult for investors to enter or exit positions without significant price impact.
Stock Performance: Severe Underperformance Despite Long-Term Gains
Saraswati Commercial's stock has delivered a negative 9.43% return over the past year, significantly underperforming both the Sensex (+8.83%) and the NBFC sector (+23.77%). The underperformance has accelerated in recent months, with the stock declining 10.22% over three months compared to the Sensex's 1.92% decline, and falling 7.55% over six months whilst the Sensex gained 2.88%.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | -1.37% | -0.86% | -0.51% |
| 1 Month | -5.17% | -0.92% | -4.25% |
| 3 Months | -10.22% | -1.92% | -8.30% |
| 6 Months | -7.55% | +2.88% | -10.43% |
| YTD | -3.67% | -2.77% | -0.90% |
| 1 Year | -9.43% | +8.83% | -18.26% |
| 2 Years | +225.86% | +15.80% | +210.06% |
| 3 Years | +358.64% | +37.11% | +321.53% |
| 5 Years | +1,244.26% | +60.75% | +1,183.51% |
The longer-term picture presents a stark contrast, with phenomenal returns over extended periods. The stock has delivered 225.86% over two years, 358.64% over three years, and an extraordinary 1,244.26% over five years. However, these historical gains appear increasingly disconnected from current fundamentals, as the recent downtrend and deteriorating quarterly performance suggest the best days may be behind the company.
Technical indicators paint a uniformly bearish picture. The stock trades below all key moving averages—5-day (₹12,347.39), 20-day (₹12,512.14), 50-day (₹12,791.47), 100-day (₹12,795.98), and 200-day (₹13,492.64)—indicating sustained downward pressure. The overall technical trend classification of "Bearish" since October 2025, combined with bearish signals from MACD, Bollinger Bands, and KST indicators, suggests further downside risk in the near term.
Investment Thesis: Multiple Red Flags Outweigh Positives
The investment case for Saraswati Commercial faces significant headwinds across multiple dimensions. The company's Mojo Score of 27 out of 100 places it firmly in "Strong Sell" territory, reflecting weak fundamentals, unfavourable technicals, and stretched valuation. The quality grade of "Below Average" underscores concerns about long-term financial performance, whilst the "Bearish" technical trend indicates negative momentum.
Key Strengths & Risk Factors
| ✅ Key Strengths | ⚠️ Key Concerns |
|---|---|
| Zero Debt Structure: Complete absence of long-term debt provides financial flexibility and eliminates refinancing risk | Extreme Income Volatility: Wild swings in quarterly net sales between negative ₹44.84 crores and positive ₹78.31 crores make forecasting impossible |
| Strong Capital Base: Shareholder funds of ₹967.56 crores provide substantial cushion for investment activities | Weak Profitability: ROE of 12.84% and ROCE of 2.79% significantly lag sector benchmarks and investor expectations |
| No Promoter Pledging: Absence of pledged shares indicates promoter confidence and financial stability | Zero Institutional Holdings: Complete absence of FII, MF, and insurance participation signals serious governance or business model concerns |
| High Margins: Operating margins above 95% and PAT margins around 75% reflect efficient cost structure | Severe Market Underperformance: Stock down 9.43% versus Sensex +8.83% and sector +23.77% over past year |
| Stable Promoter Holding: Consistent 73.99% promoter stake demonstrates long-term commitment | Stretched Valuation: P/E of 62.36x represents 2.7x sector average despite inferior fundamentals |
| Low Fixed Assets: Asset-light model reduces depreciation burden and capital expenditure requirements | Minimal Liquidity: Daily volumes in single digits make entry/exit difficult without price impact |
| Historical Gains: Exceptional 1,244.26% return over five years demonstrates past value creation | Bearish Technical Setup: Trading below all moving averages with uniformly negative technical indicators |
Outlook: What to Watch
| 🟢 Positive Catalysts | 🔴 Red Flags |
|---|---|
| Stabilisation of Quarterly Income: Consistent positive net sales for 3-4 consecutive quarters would rebuild investor confidence | Another Quarter of Negative Sales: Return to negative net sales territory would confirm unsustainable business model |
| Institutional Investor Entry: Even modest mutual fund or insurance company participation would validate investment thesis | Further Promoter Stake Increase: Additional buying by promoters amidst declining stock price could signal deeper problems |
| ROE Improvement Above 15%: Sustained profitability enhancement would justify current valuation multiples | ROE Declining Below 10%: Further deterioration in returns would eliminate any remaining investment rationale |
| Dividend Initiation: Beginning dividend payments would provide income support and signal management confidence | Rising Current Liabilities: Continued growth in current liabilities beyond ₹233 crores could strain working capital |
| Technical Trend Reversal: Move above 200-day MA at ₹13,492.64 would signal potential trend change | Break Below 52-Week Low: Decline below ₹9,215.00 would trigger further technical selling pressure |
The Verdict: High-Risk Proposition with Limited Upside
Score: 27/100
For Fresh Investors: Avoid initiating positions. The combination of extreme income volatility, weak profitability metrics, zero institutional participation, bearish technical setup, and stretched valuation creates an unfavourable risk-reward profile. The absence of a clear catalyst for improvement and the unpredictable nature of quarterly results make this unsuitable for most investor portfolios.
For Existing Holders: Consider exiting positions on any technical bounce towards the ₹12,800-₹13,000 range. The deteriorating fundamentals, sustained underperformance versus both the market and sector, and lack of institutional validation suggest limited near-term upside. Those with substantial long-term gains may consider booking partial profits whilst the stock remains above the 52-week low of ₹9,215.00.
Fair Value Estimate: ₹8,500-₹9,000 (31-36% downside), based on peer P/BV multiples of 0.9-1.0x applied to book value of ₹8,755.45, adjusted for below-average quality metrics and elevated risk profile.
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 extreme volatility and unpredictable nature of Saraswati Commercial's business make it particularly high-risk and unsuitable for conservative investors.
