SKP Securities Q3 FY26: Turnaround Gains Momentum But Sustainability Concerns Linger

The company's journey from a traditional finance company to a diversified financial services provider has been marked by volatility. Serving institutional clients, corporates, business families, professionals, and retail investors, SKP Securities operates in the competitive NBFC space with minimal institutional backing—just 0.28% institutional holdings—and a stable promoter base of 74.99%.

The stock has experienced significant turbulence, plunging from a 52-week high of ₹226.05 to its current level, representing a 51.96% decline from the peak. However, recent trading sessions have shown signs of life, with the stock surging 9.04% on January 29, 2026, and gaining 14.62% over the past week, albeit from deeply oversold levels.

Financial Performance: Inconsistent Trajectory Raises Red Flags

The company's recent financial performance has been characterised by erratic quarterly results that make trend analysis challenging. In the March 2020 quarter, SKP Securities reported net sales of ₹3.26 crores, representing a 12.80% quarter-on-quarter increase and 21.19% year-on-year growth. However, the company posted a consolidated net loss of ₹0.69 crores during the same period, a dramatic reversal from the ₹0.05 crore profit in the previous quarter.

The profit after tax margin deteriorated sharply to negative 21.17% in March 2020 from 1.73% in the previous quarter, reflecting significant operational challenges. The company's operating profit margin excluding other income stood at 0.0% in March 2020, a concerning metric that highlights the core business's inability to generate sustainable profits. This compares unfavourably with the 29.58% operating margin achieved in September 2018, demonstrating the extent of margin compression.

On an annual basis, the company reported net sales of ₹11.00 crores for the financial year ending March 2020, flat compared to the previous year. More concerning, profit after tax stood at zero for FY2020, a dramatic decline from ₹1.00 crore in FY2019 and ₹5.00 crores in FY2018. The PAT margin collapsed to 0.0% in FY2020 from 9.1% in FY2019 and 31.2% in FY2018, underscoring the severity of the profitability crisis.

Operational Challenges: Capital Efficiency Under Pressure

Despite the profitability challenges, SKP Securities has maintained a respectable return on equity of 17.20% on a five-year average basis, suggesting that during better periods, the company has demonstrated the ability to generate reasonable returns for shareholders. The latest ROE stands at 15.63%, which remains above the threshold for acceptable capital efficiency in the financial services sector.

The company's return on capital employed (ROCE) of 39.76% appears impressive on the surface, indicating efficient utilisation of capital. However, this metric must be viewed in context of the recent profitability struggles and the fact that the company operates with relatively low leverage—a net debt to equity ratio of just 0.35 suggests conservative financial management but also indicates that the company hasn't been able to profitably deploy borrowed capital.

The balance sheet as of March 2020 shows shareholder funds of ₹21.55 crores, down from ₹29.08 crores in the previous year, reflecting the impact of losses and possibly capital adjustments. The company reduced its share capital from ₹4.40 crores to ₹3.40 crores during the year, whilst reserves and surplus declined from ₹24.68 crores to ₹18.15 crores. This contraction in net worth is concerning for a financial services company, as it limits the capacity for future growth.

Current assets stood at ₹24.02 crores as of March 2020, down from ₹28.62 crores in the previous year, whilst investments decreased significantly from ₹17.31 crores to ₹4.94 crores. This liquidation of investments may have been necessary to support operations or meet obligations, but it also reduces the asset base from which the company can generate returns.

Cash Flow Dynamics: Operating Pressures Evident

The cash flow statement for FY2020 reveals significant operational challenges. The company reported negative cash flow from operations of ₹4.00 crores, a sharp deterioration from breakeven in the previous year and positive ₹6.75 crores in FY2018. This negative operating cash flow, coupled with zero profit before tax, indicates that the company is consuming cash in its day-to-day operations rather than generating it.

Interestingly, cash flow from investing activities was positive at ₹11.00 crores in FY2020, suggesting significant asset sales or investment liquidation. This was likely necessary to offset the negative operating cash flow and fund operations. Cash flow from financing activities was negative ₹7.00 crores, indicating debt repayment or dividend distributions that further strained liquidity.

Peer Comparison: Valuation Discount Reflects Quality Concerns

When compared to peers in the NBFC sector, SKP Securities presents a mixed picture. The company trades at a P/E ratio of 7.88x, significantly below the industry average of 22x and well below most peers. This valuation discount reflects market scepticism about the company's earnings quality and growth prospects.

SKP Securities' ROE of 17.20% is superior to most peers, with only Elixir Capital showing a higher ROE of 24.22%. This suggests that when the company is profitable, it generates reasonable returns on equity. However, the price-to-book value of 1.23x is middle-of-the-pack, and the dividend yield of 2.01% is modest compared to B N Rathi Securities' 3.24%.

The company's low debt-to-equity ratio of 0.35 is conservative compared to peers like Kreon Finnancial (0.79) and SPA Capital Services (1.45), but this also means the company isn't leveraging its balance sheet to drive growth. For an NBFC, the ability to prudently leverage capital is crucial for generating attractive returns, and SKP Securities' conservative approach may be limiting growth potential.

Valuation Analysis: Deep Discount Reflects Fundamental Concerns

At the current price of ₹108.60, SKP Securities trades at a significant discount to both its historical valuations and peer multiples. The stock's price-to-book value of 1.23x compares to a book value per share of ₹74.48, suggesting the market is willing to pay only a modest premium to book value despite the company's historical ability to generate mid-teen returns on equity.

The company's valuation grade has fluctuated between "Very Attractive" and "Attractive" over the past year, currently sitting at "Very Attractive" as of January 2026. However, this attractive valuation must be viewed in context—the stock has declined 45.63% over the past year, underperforming the Sensex by 52.43 percentage points. The market is clearly pricing in significant concerns about the business's sustainability and future profitability.

The EV/EBITDA multiple of 3.39x and EV/Sales of 1.14x appear modest, but these metrics are less meaningful given the company's recent profitability challenges. With inconsistent earnings and a "flat" financial trend designation as of December 2025, traditional valuation multiples become less reliable indicators of value.

Shareholding Pattern: Stable Promoter Base, Minimal Institutional Interest

The shareholding pattern reveals a company with stable promoter ownership but virtually no institutional support. Promoter holding has remained constant at 74.99% across the last five quarters, demonstrating commitment from the founding family but also suggesting limited ability or willingness to reduce stake for fundraising purposes.

The complete absence of FII, mutual fund, and insurance company holdings is a significant red flag. Institutional investors, with their rigorous due diligence processes and access to management, have chosen to stay away entirely. The negligible 0.28% holding by other domestic institutional investors suggests that even domestic institutions see limited merit in the stock.

The promoter group is led by Naresh Pachisia with 26.23%, followed by Manju Pachisia (14.69%), Naresh Pachisia And Sons HUF (14.69%), and Vaibhav Pachisia and Nikunj Pachisia with 9.69% each. Importantly, there is no promoter pledging, indicating the promoters aren't using their shares as collateral for borrowing—a positive sign for governance.

Stock Performance: Severe Underperformance Across Timeframes

The stock's performance has been dismal across most meaningful timeframes. Over the past year, SKP Securities has declined 45.63% whilst the Sensex gained 6.80%, resulting in a massive negative alpha of 52.43 percentage points. The stock has underperformed its NBFC sector by 66.55 percentage points, with the sector returning 20.92% over the same period.

The longer-term picture is more nuanced. Over five years, the stock has delivered exceptional returns of 372.17%, massively outperforming the Sensex's 76.60% return with a positive alpha of 295.57 percentage points. This suggests that the company had a period of strong performance, likely coinciding with the FY2018 results when PAT margins were 31.2%. However, the recent deterioration has erased much of those gains for investors who entered at higher levels.

The stock's beta of 1.50 indicates high volatility—it tends to move 50% more than the market in either direction. With a volatility of 49.77% over the past year compared to the Sensex's 11.23%, this is clearly a high-risk stock. The risk-adjusted return of -0.92 over the past year places it in the "HIGH RISK LOW RETURN" category, an unattractive combination for any investor.

Technical Analysis: Bearish Trend Dominates

From a technical perspective, SKP Securities remains firmly in bearish territory. The overall technical trend turned bearish on January 20, 2026, at ₹101.50, and has remained so despite the recent bounce. Multiple technical indicators are flashing warning signals, with MACD showing bearish readings on both weekly and monthly timeframes, and moving averages in bearish alignment.

The stock is trading below all key moving averages—5-day (₹93.98), 20-day (₹106.65), 50-day (₹111.63), 100-day (₹113.54), and 200-day (₹116.94)—a classic sign of a downtrend. The immediate support lies at the 52-week low of ₹85.05, whilst resistance is expected at the 20-day moving average around ₹106.65, followed by the 100-day moving average at ₹113.54.

Delivery volumes have shown some improvement, with a one-day delivery change of 83.85% versus the five-day average, suggesting some genuine buying interest rather than purely speculative trading. However, this needs to be sustained over multiple sessions to signal a meaningful trend reversal.

Investment Thesis: Multiple Warning Signals Override Valuation Appeal

The investment thesis for SKP Securities presents a challenging picture. Whilst the stock trades at superficially attractive valuations with a P/E of 8x and P/BV of 1.23x, these metrics are overshadowed by fundamental concerns about business sustainability and earnings quality.

The company's proprietary Mojo score stands at just 26 out of 100, firmly in "STRONG SELL" territory. This low score reflects the convergence of multiple negative factors: bearish technical trends, flat financial performance in recent quarters, below-average quality grade, and concerning long-term trends despite the attractive valuation.

Outlook: What Investors Should Monitor

For investors considering SKP Securities or existing shareholders evaluating their positions, several key factors warrant close monitoring in the coming quarters. The company stands at a critical juncture where it must demonstrate the ability to return to consistent profitability and positive operating cash flow generation.