The third quarter results underscore the fundamental challenges facing Simplex Realty, a company that transitioned from textile manufacturing to real estate development but has struggled to generate meaningful operational revenues. With net sales of merely ₹0.21 crores in Q3 FY26, the company's revenue generation capability remains severely constrained, whilst operating losses before other income stood at ₹1.04 crores, translating to an operating margin of negative 495.24%. The company continues to rely heavily on other income of ₹0.60 crores to partially offset operational losses, highlighting the absence of a sustainable core business model.
| Quarter | Net Sales (₹ Cr) | QoQ Change | Net Profit (₹ Cr) | QoQ Change | PAT Margin % |
|---|---|---|---|---|---|
| Dec'25 (Q3) | 0.21 | ▼ 84.21% | -0.36 | ▲ 38.46% | -171.43% |
| Sep'25 (Q2) | 1.33 | ▼ 46.80% | -0.26 | ▼ 77.19% | -19.55% |
| Jun'25 (Q1) | 2.50 | ▲ 861.54% | -1.14 | ▼ 280.00% | -45.60% |
| Mar'25 (Q4) | 0.26 | 0.00% | -0.30 | ▼ 163.83% | -115.38% |
| Dec'24 (Q3) | 0.26 | ▼ 3.70% | 0.47 | ▲ 176.47% | 180.77% |
| Sep'24 (Q2) | 0.27 | ▼ 93.27% | 0.17 | ▼ 82.29% | 62.96% |
| Jun'24 (Q1) | 4.01 | — | 0.96 | — | 23.94% |
Financial Performance: A Business Without Revenue Momentum
The financial performance in Q3 FY26 represents a stark deterioration from the already weak Q2 FY26 levels. Net sales collapsed from ₹1.33 crores in Q2 FY26 to ₹0.21 crores in Q3 FY26, an 84.21% sequential decline that signals severe execution challenges in the real estate development business. On a year-on-year basis, revenue declined 19.23% from ₹0.26 crores in Q3 FY25, demonstrating the company's inability to scale operations or generate consistent project revenues.
Operating losses before other income widened to ₹1.04 crores in Q3 FY26 from ₹0.98 crores in Q2 FY26, resulting in an operating margin of negative 495.24%. The company's cost structure remains bloated relative to its revenue base, with employee costs of ₹0.80 crores in Q3 FY26 exceeding total sales by nearly four times. This fundamental mismatch between fixed costs and revenue generation capability raises serious questions about operational viability.
The consolidated net loss narrowed marginally to ₹0.36 crores in Q3 FY26 from ₹0.26 crores in Q2 FY26, a 38.46% quarter-on-quarter improvement that reflects lower absolute losses rather than any operational turnaround. However, on a year-on-year basis, the company swung from a profit of ₹0.47 crores in Q3 FY25 to a loss of ₹0.36 crores in Q3 FY26, a 176.60% deterioration. The PAT margin stood at negative 171.43% in Q3 FY26, underscoring the complete absence of profitability at the operational level.
Operational Challenges: Structural Weakness in Core Business
Simplex Realty's operational metrics reveal a company struggling with fundamental business model challenges. The company's average return on capital employed (ROCE) stands at negative 3.87%, whilst return on equity (ROE) averages 0.0%, indicating an inability to generate returns on deployed capital. The latest ROE of negative 1.07% further emphasises the wealth destruction occurring at the shareholder level, with the company consuming rather than creating value.
The balance sheet as of March 2025 shows shareholder funds of ₹116.10 crores, comprising share capital of ₹2.99 crores and reserves of ₹113.11 crores. Whilst the company maintains a debt-free status with zero long-term borrowings, this apparent financial strength is undermined by the complete absence of revenue-generating capability. Fixed assets stood at just ₹0.81 crores, whilst investments of ₹14.05 crores and current assets of ₹119.60 crores constitute the bulk of the asset base. The minimal fixed asset base suggests limited operational infrastructure for real estate development activities.
The company's reliance on other income has become increasingly pronounced. In Q3 FY26, other income of ₹0.60 crores was nearly three times the operating revenue of ₹0.21 crores, highlighting that the company derives more value from treasury operations and asset monetisation than from its stated real estate business. Over the nine-month period of FY26 (April-December 2025), other income totalled ₹2.31 crores against total sales of ₹4.04 crores, representing 57.18% of revenue from non-operating sources.
Critical Operational Red Flags
Revenue Collapse: Q3 FY26 revenue of ₹0.21 crores represents an 84.21% QoQ decline, indicating severe project execution issues or complete absence of new business generation.
Structural Losses: Operating losses before other income of ₹1.04 crores against revenue of ₹0.21 crores result in a negative 495.24% operating margin, demonstrating fundamental business model unviability.
Other Income Dependency: Other income of ₹0.60 crores exceeds operating revenue by 2.86 times, revealing that the company is essentially a treasury operation rather than an active real estate developer.
Quality Assessment: Below Average Fundamentals
Simplex Realty's quality grade stands at "Below Average," reflecting weak fundamental metrics across multiple parameters. The company's five-year sales growth of negative 8.14% and five-year EBIT growth of negative 1.26% demonstrate sustained revenue and profitability deterioration over the long term. The average EBIT to interest coverage ratio of negative 3.74 times indicates that the company generates negative operating profits, rendering traditional debt servicing metrics meaningless.
The company's average sales to capital employed ratio of just 0.03 times highlights extremely poor asset utilisation, with the company generating merely ₹3 of sales for every ₹100 of capital employed. This dismal capital productivity underscores the fundamental mismatch between the company's asset base and its ability to generate revenues. The tax ratio of 100% appears anomalous given the loss-making status, likely reflecting deferred tax adjustments or exceptional items.
On a positive note, the company maintains zero promoter pledging, with promoter holding at 55.11% as of December 2025. Institutional holdings stand at 15.08%, comprising primarily insurance companies (14.96%) with negligible presence from mutual funds or foreign institutional investors. The absence of institutional investor interest reflects the market's assessment of the company's weak fundamentals and limited growth prospects.
| Quality Parameter | Value | Assessment |
|---|---|---|
| 5-Year Sales Growth | -8.14% | Declining |
| 5-Year EBIT Growth | -1.26% | Negative |
| Average ROCE | -3.87% | Weak |
| Average ROE | 0.0% | Weak |
| Sales to Capital Employed | 0.03x | Poor Utilisation |
| Debt to Equity | 0.00 | Debt-Free |
| Promoter Pledging | 0.0% | No Pledging |
Peer Comparison: Weakest Fundamentals in Realty Sector
When benchmarked against realty sector peers, Simplex Realty emerges as the weakest performer across key financial metrics. The company's ROE of 0.0% compares unfavourably with peers such as Sam Industries (10.47%) and Dhansafal Finance (2.63%), highlighting its inability to generate returns on equity capital. Whilst the company is loss-making and hence carries a P/E ratio classified as "NA (Loss Making)," its price-to-book value of 0.41 times is the second-lowest in the peer group, suggesting the market assigns minimal value to the company's asset base.
The debt-free status with a debt-to-equity ratio of 0.00 positions Simplex Realty favourably versus highly leveraged peers like Rodium Realty (5.07), but this financial conservatism has not translated into operational performance or shareholder value creation. The company's market capitalisation of ₹49.00 crores ranks it sixth amongst the peer group, reflecting its micro-cap status and limited institutional following.
| Company | P/E (TTM) | ROE % | Debt to Equity | Price to Book |
|---|---|---|---|---|
| Simplex Realty | NA (Loss Making) | 0.0% | 0.00 | 0.41 |
| Rodium Realty | 5.76 | 0.0% | 5.07 | 2.75 |
| Sam Industries | 11.50 | 10.47% | 0.37 | 0.69 |
| Golden Tobacco | 8.75 | 0.0% | 0.01 | -0.26 |
| Dhansafal Finance | 501.48 | 2.63% | 0.26 | 0.89 |
| Ansal Properties | NA (Loss Making) | 0.0% | -0.55 | -0.06 |
Valuation Analysis: Deep Discount Reflects Fundamental Weakness
Simplex Realty trades at a price-to-book value of 0.41 times, representing a 59% discount to book value of ₹387.83 per share. Whilst this deep discount might superficially appear attractive, it accurately reflects the market's assessment of the company's inability to generate returns on its asset base. With an ROE of 0.0% and negative operating margins, the company's book value represents largely unproductive assets rather than earnings-generating capacity.
The company's valuation grade is classified as "Risky," having been in this category since April 2023. The loss-making status renders traditional valuation metrics like P/E ratio meaningless, whilst the EV/EBITDA ratio of negative 9.72 times reflects negative operating profits. The EV/Sales ratio of 9.32 times appears elevated, but given the minuscule revenue base of ₹4.00 crores annually, this metric provides limited insight into intrinsic value.
The stock's 52-week range of ₹142.40 to ₹243.35 shows significant volatility, with the current price of ₹156.70 positioned 10.04% above the 52-week low but 35.61% below the 52-week high. The dividend yield is not applicable given the company's loss-making status, though a dividend of ₹1 per share was paid in July 2024, likely funded from reserves rather than current earnings.
Shareholding Pattern: Stable Promoter Base, Minimal Institutional Interest
The shareholding pattern as of December 2025 shows promoter holding at 55.11%, unchanged from September 2025 but marginally higher from 54.88% in December 2024. The promoter group, led by Lucky Vyapaar & Holdings Private Ltd. (24.84%) and New Textiles LLP (20.10%), demonstrates stability with no pledging of shares, indicating financial comfort at the promoter level despite weak operational performance.
Institutional holdings remain negligible, with zero participation from foreign institutional investors and mutual funds. Insurance companies hold 14.96% of equity, unchanged over the past five quarters, whilst other domestic institutional investors maintain a minimal 0.12% stake. The complete absence of mutual fund and FII interest reflects the company's limited liquidity, weak fundamentals, and lack of institutional-grade investment characteristics.
Non-institutional holdings, comprising retail and other investors, stand at 29.82% as of December 2025, marginally declining from 30.04% in December 2024. The stable shareholding pattern across categories suggests limited trading activity and investor apathy, consistent with the stock's low liquidity profile.
| Shareholder Category | Dec'25 | Sep'25 | Jun'25 | Mar'25 | QoQ Change |
|---|---|---|---|---|---|
| Promoter | 55.11% | 55.11% | 55.07% | 54.91% | 0.00% |
| FII | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
| Mutual Funds | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
| Insurance | 14.96% | 14.96% | 14.96% | 14.96% | 0.00% |
| Other DII | 0.12% | 0.12% | 0.12% | 0.12% | 0.00% |
| Non-Institutional | 29.82% | 29.82% | 29.86% | 30.02% | 0.00% |
Stock Performance: Severe Underperformance Across All Timeframes
Simplex Realty's stock performance has been dismal across most timeframes, with the stock declining 4.89% on February 11, 2026, to close at ₹156.70. Over the past one year, the stock has declined 20.13%, significantly underperforming the Sensex return of 10.41% by 30.54 percentage points. This underperformance extends across shorter timeframes as well, with the stock down 13.33% over three months against a Sensex gain of 0.43%, and down 13.88% over six months versus a Sensex gain of 4.50%.
The stock's technical indicators paint a bearish picture, with the current trend classified as "Bearish" since February 9, 2026. The stock trades below all key moving averages, including the 5-day MA (₹164.58), 20-day MA (₹160.08), 50-day MA (₹166.83), and 100-day MA (₹176.72), indicating sustained selling pressure and absence of technical support levels. The MACD, RSI, and Bollinger Bands all flash bearish signals across weekly and monthly timeframes, whilst the Dow Theory suggests a "Mildly Bearish" outlook.
Longer-term returns show mixed performance, with the stock delivering 90.05% returns over three years against Sensex returns of 38.81%, representing an alpha of 51.24 percentage points. However, this outperformance is concentrated in the 2022-2023 period and has since reversed, with the stock underperforming significantly over the past year. The stock's beta of 1.50 indicates high volatility relative to the market, classified as a "High Beta Stock" with significantly greater price swings than the broader indices.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Day | -4.89% | -0.05% | -4.84% |
| 1 Week | -3.57% | +0.50% | -4.07% |
| 1 Month | -4.19% | +0.79% | -4.98% |
| 3 Months | -13.33% | +0.43% | -13.76% |
| 6 Months | -13.88% | +4.50% | -18.38% |
| YTD | -7.28% | -1.16% | -6.12% |
| 1 Year | -20.13% | +10.41% | -30.54% |
| 3 Years | +90.05% | +38.81% | +51.24% |
| 5 Years | +193.17% | +63.46% | +129.71% |
Investment Thesis: Fundamental Weakness Outweighs Valuation Discount
The investment case for Simplex Realty is severely compromised by fundamental operational weaknesses that overshadow any apparent valuation discount. The company's proprietary Mojo Score of 12 out of 100 and "Strong Sell" rating reflect the confluence of negative factors: bearish technical trend, flat financial performance, weak long-term fundamental strength, and sustained underperformance versus the market.
The company's financial trend is classified as "Flat" for Q3 FY26, whilst the technical trend remains firmly "Bearish." The quality grade of "Below Average" and valuation assessment of "Risky" complete a picture of a company facing structural challenges across all key parameters. The absence of any positive catalysts or turnaround indicators suggests limited near-term prospects for improvement.
Key Strengths & Risk Factors
✓ Key Strengths
- Debt-Free Balance Sheet: Zero long-term debt with a debt-to-equity ratio of 0.00, providing financial flexibility without interest burden
- No Promoter Pledging: Promoters have not pledged any shares, indicating confidence and financial stability at the ownership level
- Stable Promoter Holding: Promoter stake of 55.11% has remained stable, demonstrating commitment to the company
- Healthy Current Assets: Current assets of ₹119.60 crores provide liquidity cushion and potential for asset monetisation
- Long Operating History: Company incorporated in 1912 with over a century of corporate existence
⚠ Key Concerns
- Revenue Collapse: Q3 FY26 revenue of ₹0.21 crores represents an 84.21% QoQ decline, indicating severe business execution challenges
- Persistent Losses: Three consecutive quarters of losses with Q3 FY26 net loss of ₹0.36 crores, reflecting absence of operational profitability
- Negative Operating Margins: Operating margin of negative 495.24% demonstrates fundamental business model unviability
- Zero ROE: Return on equity of 0.0% indicates complete inability to generate returns on shareholder capital
- Other Income Dependency: Other income exceeds operating revenue, revealing treasury operations rather than active business
- Declining Sales Growth: Five-year sales CAGR of negative 8.14% shows sustained revenue deterioration
- No Institutional Interest: Zero mutual fund and FII holdings reflect absence of institutional-grade investment characteristics
Outlook: What to Watch
Positive Catalysts
- Successful launch and execution of new real estate projects with meaningful revenue contribution
- Strategic asset monetisation or sale of non-core investments to unlock shareholder value
- Cost rationalisation programme to align expenses with revenue base
- Return to positive operating margins through improved project mix or higher realisations
- Entry of strategic investor or partnership to enhance execution capabilities
Red Flags to Monitor
- Further revenue decline in Q4 FY26 below ₹0.50 crores, indicating complete business stagnation
- Continued quarterly losses exceeding ₹0.50 crores, depleting reserves and threatening sustainability
- Reduction in promoter holding or emergence of pledging, signalling financial stress
- Decline in other income below ₹0.50 crores per quarter, removing the cushion against operating losses
- Increase in current liabilities or emergence of short-term debt, indicating liquidity pressures
The Verdict: Avoid – Fundamental Weakness Precludes Investment
Score: 12/100
For Fresh Investors: Avoid initiating any position. The company's inability to generate meaningful operating revenues, persistent losses, and negative operating margins of 495.24% indicate a fundamentally broken business model. The deep discount to book value reflects genuine concerns about asset productivity rather than an attractive entry opportunity.
For Existing Holders: Consider exiting positions on any price rallies. The three consecutive quarters of losses, collapsing revenues, and complete absence of turnaround catalysts suggest limited prospects for recovery. Whilst the company maintains a debt-free balance sheet, this financial strength has not translated into operational performance or shareholder value creation.
Fair Value Estimate: ₹120-130 (20-25% downside from current levels) – The stock's current price of ₹156.70 appears overvalued relative to its earnings power and growth prospects, with fair value estimated at book value discount of 65-70% given the zero ROE and negative operating margins.
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. All investments carry risk, including the potential loss of principal.
