Saumya Consultants Q2 FY26: Steep Losses Raise Viability Concerns

The quarter's results paint a concerning picture of operational distress. Net sales plummeted 58.03% quarter-on-quarter to ₹3.84 crores from ₹9.15 crores in Q1 FY26, whilst year-on-year revenue declined 83.08% from ₹22.69 crores in Q2 FY25. This revenue collapse has triggered a cascade of negative financial metrics, with operating profit before depreciation, interest, tax, and other income falling to a loss of ₹4.21 crores, representing a margin of negative 109.64%.

Financial Performance: A Quarter of Severe Deterioration

In Q2 FY26, Saumya Consultants' financial performance deteriorated across all key metrics. Net sales of ₹3.84 crores represented an 83.08% year-on-year decline from ₹22.69 crores and a 58.03% sequential drop from ₹9.15 crores in Q1 FY26. This revenue collapse appears to stem from fundamental business challenges rather than seasonal factors, as the company's operating activities have generated negative margins consistently across recent quarters.

The company's operating profit before depreciation, interest, tax, and other income stood at a loss of ₹4.21 crores, translating to an operating margin of negative 109.64%. This compares unfavourably with the positive ₹11.67 crores operating profit (127.54% margin) in Q1 FY26 and the ₹12.38 crores profit (54.56% margin) in Q2 FY25. The dramatic swing suggests severe operational distress beyond normal business fluctuations.

Profit before tax declined to a loss of ₹4.18 crores in Q2 FY26 from a profit of ₹11.67 crores in the previous quarter. The company recorded a tax credit of ₹0.59 crores (effective tax rate of 14.11%), resulting in a net loss of ₹3.59 crores. The PAT margin of negative 93.49% highlights the severity of operational challenges facing the business.

On a half-yearly basis for H1 FY26, the company reported combined net sales of ₹12.99 crores, representing a 65.10% decline compared to the corresponding period. This sustained revenue pressure across multiple quarters raises fundamental questions about the company's business model sustainability and competitive positioning in the NBFC sector.

Capital Efficiency: Deteriorating Returns Signal Structural Issues

Saumya Consultants' return on equity has deteriorated sharply to negative 5.88% in the latest period, down from an average ROE of 13.21% over the longer term. This negative ROE indicates the company is destroying shareholder value, with losses eroding the equity base accumulated over prior years. For an NBFC, where capital efficiency and consistent returns are paramount, this represents a fundamental failure in business execution.

The company's return on capital employed has similarly collapsed to negative 18.80%, suggesting that the business is generating losses not just on equity capital but on the total capital deployed. This metric is particularly concerning for a financial services company, where the ability to generate consistent spreads and returns on deployed capital forms the core of the business model.

From a balance sheet perspective, Saumya Consultants maintains shareholder funds of ₹68.95 crores as of March 2020 (latest available annual data), with no long-term debt. Whilst the absence of leverage might appear conservative, it also suggests limited business activity and growth. Current assets stood at ₹66.46 crores against current liabilities of ₹1.17 crores, indicating adequate short-term liquidity but raising questions about asset utilisation and productivity.

Business Model Viability: Fundamental Questions Remain Unanswered

As an NBFC, Saumya Consultants operates in a sector characterised by regulatory oversight, capital requirements, and the need for consistent spread management. However, the company's financial performance raises fundamental questions about its business model viability. The extreme revenue volatility, ranging from negative sales to double-digit crore figures quarter-to-quarter, suggests either a project-based or highly lumpy business model that lacks recurring revenue streams.

The company's five-year sales growth of 14.63% appears modest, but this figure masks the severe volatility and recent deterioration. More concerning is the five-year EBIT growth of negative 238.75%, indicating that whilst the company may have grown revenues modestly over the long term, it has simultaneously destroyed operating profitability at an alarming rate.

With institutional holdings at zero and no participation from foreign institutional investors, mutual funds, or insurance companies, the company lacks the credibility signal that typically accompanies quality financial services businesses. The absence of institutional interest, combined with the operational performance, suggests that sophisticated investors have avoided or exited this stock.

Within the peer group of micro-cap NBFCs, Saumya Consultants trades at a price-to-book value of 0.88x, below its book value of ₹170.93 per share. This discount to book value typically signals market scepticism about a company's ability to generate adequate returns on its equity base—a concern validated by the company's negative ROE and inconsistent profitability. Whilst the company's historical average ROE of 13.21% appears respectable compared to some peers, the recent deterioration to negative 5.88% undermines this metric's relevance.

Valuation Analysis: Low Price Reflects High Risk

At the current market price of ₹160.65, Saumya Consultants trades at a price-to-book value of 0.88x, representing a 12% discount to its stated book value of ₹170.93 per share. For loss-making companies, traditional earnings-based valuation multiples like P/E ratios become meaningless, and the stock is appropriately classified as "NA (Loss Making)" on this metric.

The company's enterprise value to EBITDA stands at negative 3.57x and EV to EBIT at negative 3.41x, both reflecting the current loss-making status. The EV to sales ratio of 1.71x suggests the market values the entire business at approximately 1.7 times its annual revenue run rate—a modest multiple that reflects significant scepticism about future profitability and growth prospects.

The stock's valuation grade has fluctuated significantly over the past year, moving from "Very Attractive" in August 2024 to "Attractive" and "Fair" before settling at "Attractive" as of July 2025. However, this valuation assessment appears disconnected from operational reality, as the company's deteriorating fundamentals and inconsistent profitability suggest the discount to book value reflects genuine concerns about asset quality and earning power rather than an attractive entry opportunity.

Shareholding: Frozen Pattern Reflects Limited Interest

Saumya Consultants' shareholding pattern has remained completely static over the past five quarters, with promoter holding steady at 54.88% and non-institutional investors holding the remaining 45.12%. The complete absence of foreign institutional investors, mutual funds, insurance companies, and other domestic institutional investors signals a lack of institutional confidence in the company's prospects.

The promoter group, led by Arun Kumar Agarwalla (24.21%), Arun Kumar Agarwalla HUF (15.16%), Sudha Agarwalla (9.92%), and Gaurang Agarwalla (5.59%), maintains majority control but has not increased stake despite the stock trading below book value. Notably, there is no promoter pledging, which at least indicates the promoters are not using shares as collateral for borrowings—a small positive in an otherwise concerning picture.

The static shareholding pattern, combined with zero institutional participation, suggests the stock trades in a highly illiquid market with limited investor interest. This illiquidity is confirmed by trading volumes, with just 1 share traded on November 14, 2025, highlighting the difficulty investors would face in building or exiting positions.

Stock Performance: Extreme Volatility Masks Secular Decline

Saumya Consultants' share price closed at ₹160.65 on November 14, 2025, down 0.37% from the previous close of ₹161.25. However, this single-day movement obscures the stock's extreme volatility and overall negative performance trajectory over most relevant timeframes.

The stock has declined 23.86% over the past year, significantly underperforming the Sensex's 9.12% gain and generating negative alpha of 32.98 percentage points. Year-to-date performance is particularly concerning, with the stock down 49.58% against the Sensex's 8.34% gain, representing underperformance of 57.92 percentage points.

Interestingly, the stock shows positive returns over longer two-year and three-year periods, with gains of 56.15% and 89.22% respectively, both outperforming the broader market. However, these longer-term gains appear to reflect a period of better operational performance that has since reversed. The stock's 52-week high of ₹424.00 and current price of ₹160.65 represent a 62.11% decline from peak levels, indicating significant wealth destruction for investors who bought near recent highs.

Technical indicators paint a mixed picture, with the stock classified as "Mildly Bearish" after transitioning from a "Bearish" trend on September 26, 2025. The stock trades below all key moving averages—5-day (₹154.68), 20-day (₹156.51), 50-day (₹153.67), 100-day (₹149.73), and 200-day (₹190.92)—though it has recently moved above some shorter-term averages. With a beta of 1.50, the stock exhibits 50% higher volatility than the broader market, making it a high-risk proposition even before considering fundamental concerns.

Investment Thesis: Multiple Red Flags Outweigh Limited Positives

Saumya Consultants' investment thesis is severely compromised by multiple structural concerns. The company's Mojo Score of 20 out of 100 places it firmly in "Strong Sell" territory, with the rating having deteriorated from "Sell" to "Strong Sell" in March 2025. This low score reflects the convergence of negative factors across valuation, quality, financial trends, and technical indicators.

The company's quality assessment of "Below Average" reflects its inconsistent long-term financial performance, with five-year EBIT growth of negative 238.75% despite modest sales growth of 14.63%. The financial trend is classified as "Negative" based on the latest quarterly results, with net sales in H1 FY26 declining 65.10% and quarterly profit before tax and other income falling 291.1% compared to the previous four-quarter average.

From a risk perspective, the company exhibits high volatility (61.55% annual volatility versus 12.26% for the Sensex) with negative risk-adjusted returns of -0.39 over the past year. This places it in the "High Risk Low Return" category—the worst possible combination for investors. The stock's high beta of 1.50 amplifies market movements, adding another layer of risk without commensurate return potential.

Outlook: What to Watch

For Saumya Consultants to rebuild investor confidence, the company must demonstrate consistent operational improvement across multiple quarters. This includes stabilising revenue streams, returning to positive operating margins, and generating sustainable returns on equity. Until such improvements materialise, the stock remains a high-risk proposition unsuitable for most investors.