With a market capitalisation of ₹456.00 crores, Unifinz Capital has emerged as one of the fastest-growing micro-cap NBFCs in India. The company, which transformed from textile manufacturing (formerly Shree Worstex Limited) to financial services in December 2022, has demonstrated extraordinary operational momentum across all financial parameters. However, the stock has faced technical headwinds, declining 4.95% to ₹98.00 on February 06, 2026, and trading below all key moving averages despite the stellar fundamental performance.
The quarter's results showcase a company in hypergrowth mode, with operating profit (PBDIT excluding other income) reaching ₹49.38 crores—up 371.28% year-on-year. The PAT margin stood at a healthy 18.35%, whilst operating margins expanded to 33.48%, reflecting strong pricing power and operational efficiency. Interest costs rose to ₹11.02 crores from ₹1.85 crores a year ago, indicating aggressive business scaling, yet the company maintained robust profitability metrics.
| Quarter | Net Sales (₹ Cr) | QoQ Change | Net Profit (₹ Cr) | QoQ Change | Operating Margin |
|---|---|---|---|---|---|
| Dec'25 (Q3) | 147.50 | +14.28% | 27.06 | +12.51% | 33.48% |
| Sep'25 (Q2) | 129.07 | +55.52% | 24.05 | +43.09% | 32.39% |
| Jun'25 (Q1) | 82.99 | +82.88% | 16.81 | +127.78% | 31.38% |
| Mar'25 (Q4) | 45.38 | +21.89% | 7.38 | +20.20% | 24.35% |
| Dec'24 (Q3) | 37.23 | +56.82% | 6.14 | +25.56% | 28.15% |
| Sep'24 (Q2) | 23.74 | +58.27% | 4.89 | +194.58% | 35.26% |
| Jun'24 (Q1) | 15.00 | — | 1.66 | — | 27.87% |
Financial Performance: Hypergrowth Trajectory Sustained
In Q3 FY26, Unifinz Capital's net sales reached ₹147.50 crores, representing a sequential increase of 14.28% from Q2 FY26's ₹129.07 crores and a stunning 296.19% year-on-year surge from ₹37.23 crores in Q3 FY25. This marks the seventh consecutive quarter of double-digit sequential growth, demonstrating exceptional business momentum in the NBFC's lending operations.
Net profit for Q3 FY26 stood at ₹27.06 crores, up 12.51% quarter-on-quarter from ₹24.05 crores in Q2 FY26 and an extraordinary 340.88% higher than the ₹6.14 crores recorded in Q3 FY25. The PAT margin compressed slightly to 18.35% from 18.63% in the previous quarter, primarily due to higher interest costs associated with business expansion, yet remained substantially ahead of the 16.49% margin a year ago.
Operating profit (PBDIT excluding other income) expanded to ₹49.38 crores in Q3 FY26, delivering a 18.10% sequential increase and a remarkable 371.28% year-on-year jump. Operating margins improved to 33.48% from 32.39% in Q2 FY26 and 28.15% in Q3 FY25, reflecting improved operational efficiency and favourable business mix. The consistent margin expansion over the past year signals strong pricing discipline and effective cost management.
Interest costs rose sharply to ₹11.02 crores in Q3 FY26 from ₹8.62 crores in Q2 FY26 and ₹1.85 crores in Q3 FY25, reflecting aggressive balance sheet expansion to support loan book growth. Despite this increase, the company's ability to maintain healthy operating margins above 33% demonstrates strong net interest margin (NIM) management and effective asset-liability matching. Employee costs increased modestly to ₹7.14 crores from ₹5.93 crores sequentially, indicating controlled operational leverage as the business scales.
Operational Excellence: Exceptional Capital Efficiency
Unifinz Capital's operational performance is characterised by exceptional return on equity (ROE) of 45.94% as of the latest quarter, placing it amongst the top performers in the NBFC sector. The average ROE over the assessment period stands at 20.12%, significantly above industry benchmarks and reflecting superior capital efficiency. This high ROE demonstrates the management's ability to generate substantial returns for shareholders whilst scaling the business rapidly.
The company's return on capital employed (ROCE) reached an impressive 36.05%, underlining efficient deployment of capital in high-yielding lending opportunities. This metric has improved substantially from previous periods, indicating that the incremental capital deployed is generating strong returns. The combination of high ROE and ROCE suggests a business model with significant competitive advantages and strong unit economics.
Key Operational Strengths
Exceptional Capital Efficiency: ROE of 45.94% and ROCE of 36.05% demonstrate superior capital deployment and profitability generation. The company's ability to maintain such elevated returns whilst scaling rapidly is a testament to strong underwriting standards and effective risk management.
Consistent Margin Expansion: Operating margins have expanded from 27.87% in Q1 FY25 to 33.48% in Q3 FY26, reflecting operational leverage and pricing power in the company's target lending segments.
Balance sheet analysis reveals shareholder funds of ₹77.55 crores as of March 2025, up dramatically from ₹3.70 crores in March 2024, driven by retained earnings and a capital raise that increased share capital from ₹3.14 crores to ₹8.85 crores. The company operates with zero long-term debt on the balance sheet, though current liabilities have risen to ₹49.91 crores from ₹36.74 crores, reflecting short-term borrowings to fund the expanding loan book. The debt-to-equity ratio of 1.13 times indicates moderate leverage, providing headroom for further growth whilst maintaining financial stability.
Cash flow dynamics show negative operating cash flow of ₹30.00 crores for FY25, driven by a ₹86.00 crores increase in working capital as the company rapidly expanded its lending operations. This was funded through ₹52.00 crores of financing cash flow, primarily equity infusion and borrowings. The closing cash position of ₹7.00 crores as of March 2025 provides adequate liquidity for near-term operations, though the company will likely require additional funding to sustain its aggressive growth trajectory.
Asset Quality & Growth Balance: Scaling Without Compromise
For an NBFC experiencing hypergrowth, maintaining asset quality whilst scaling rapidly is critical. Unifinz Capital's consistent profitability growth and expanding margins suggest that the company has successfully balanced growth with credit quality. The absence of disclosed NPA data in the provided information prevents a detailed asset quality assessment, though the sustained profitability and margin expansion imply that credit costs remain manageable.
The company's five-year sales compound annual growth rate (CAGR) of 174.52% and EBIT CAGR of 121.64% represent extraordinary expansion rates that few NBFCs achieve. This growth has been accompanied by improving profitability metrics, with the PAT margin expanding from 11.07% in Q1 FY25 to 18.35% in Q3 FY26, suggesting that the business is achieving scale efficiencies.
Growth-Quality Trade-off
Unifinz Capital's ability to maintain PAT margins above 18% whilst growing sales at triple-digit rates indicates strong underwriting discipline and favourable portfolio seasoning. The sequential margin stability over the past three quarters (18.35%-20.26% range) suggests that the company has established sustainable unit economics, even as it scales aggressively. However, investors should monitor asset quality metrics closely as the loan book matures, particularly given the high-growth environment and rising interest rate scenario.
Employee costs as a percentage of sales have declined from 16.73% in Q1 FY25 to 4.84% in Q3 FY26, demonstrating significant operating leverage. This improvement reflects both scale benefits and potentially greater automation or process efficiency in loan origination and servicing. The controlled employee cost trajectory whilst maintaining service quality is a positive indicator of operational maturity.
| Company | P/E (TTM) | P/BV | ROE (%) | Debt/Equity | Div Yield (%) |
|---|---|---|---|---|---|
| Unifinz Capital | 7.98 | 3.67 | 20.12 | 1.13 | 0.08 |
| Innovassynth Technologies | NA (Loss Making) | 12.67 | 0.00 | 0.10 | — |
| Niyogin Fintech | NA (Loss Making) | 1.57 | 0.00 | 0.48 | — |
| India Finsec | 33.14 | 3.96 | 11.19 | 2.06 | — |
| Laxmi India Finance | 13.27 | 1.10 | 12.56 | 4.42 | — |
| Welspun Investments | 148.79 | 0.64 | 1.09 | 0.00 | — |
Unifinz Capital's peer comparison reveals a compelling valuation proposition. At a P/E ratio of 7.98 times, the company trades at a significant discount to the industry average of 22 times and peers like India Finsec (33.14x) and Laxmi India Finance (13.27x). More importantly, Unifinz's ROE of 20.12% substantially exceeds that of comparable NBFCs, with India Finsec at 11.19% and Laxmi India Finance at 12.56%. The company's price-to-book ratio of 3.67 times appears reasonable given the superior return profile, particularly when compared to India Finsec's 3.96x P/BV with lower ROE.
Valuation Analysis: Attractive Entry Point Despite Technical Weakness
At the current market price of ₹98.00, Unifinz Capital trades at a P/E (TTM) of 7.98 times and price-to-book value of 3.67 times. The valuation multiples appear attractive relative to the company's growth profile and profitability metrics. The EV/EBITDA ratio of 6.26 times and EV/Sales of 1.90 times are reasonable for a high-growth NBFC, particularly one delivering triple-digit revenue growth and expanding margins.
The company's PEG ratio of 0.03 suggests significant undervaluation relative to growth, though investors should interpret this metric cautiously given the base effect from the company's recent transformation. The stock's 52-week range of ₹90.00 to ₹134.94 indicates substantial volatility, with the current price near the lower end of this range despite strong fundamental performance.
The valuation grade has been classified as "Very Expensive" since November 2024, reflecting the stock's substantial re-rating from its transformation period. However, this classification appears inconsistent with the current P/E of 7.98x, which is below market averages. The disconnect between the valuation grade and actual multiples may reflect the grading system's assessment of historical valuations or concerns about sustainability of the current growth trajectory.
Based on the company's FY25 earnings of approximately ₹20.00 crores and current market capitalisation of ₹456.00 crores, the implied P/E is around 22.8 times on FY25 earnings. If the company maintains its Q3 FY26 quarterly run-rate (₹27.06 crores per quarter), annualised earnings would approach ₹108 crores, implying a forward P/E of approximately 4.2 times—an exceptionally attractive valuation for a company growing at triple-digit rates. This suggests significant upside potential if the growth momentum sustains.
Stock Performance: Technical Weakness Amidst Fundamental Strength
Unifinz Capital's stock performance presents a stark contrast between short-term technical weakness and long-term fundamental strength. The stock closed at ₹98.00 on February 06, 2026, down 4.95% on the day and trading below all key moving averages—5-day (₹100.82), 20-day (₹101.12), 50-day (₹104.65), 100-day (₹106.80), and 200-day (₹112.91). This technical setup indicates a bearish trend that began on January 30, 2026.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | +3.16% | +1.59% | +1.57% |
| 1 Month | -6.53% | -1.74% | -4.79% |
| 3 Months | +7.41% | +0.32% | +7.09% |
| 6 Months | -16.47% | +3.77% | -20.24% |
| YTD (FY26) | +4.76% | -1.92% | +6.68% |
| 1 Year | -25.18% | +7.07% | -32.25% |
| 2 Years | +727.42% | +15.78% | +711.64% |
The returns analysis reveals a bifurcated performance story. Over the past year, the stock has declined 25.18%, significantly underperforming the Sensex's 7.07% gain and the NBFC sector's 19.84% return. This 45.02 percentage point underperformance versus the sector is concerning and reflects either profit-booking after the extraordinary 2-year rally or investor concerns about valuation sustainability.
However, the 2-year return of 727.42% demonstrates the transformational value creation since the company's pivot to financial services. This exceptional performance delivered 711.64 percentage points of alpha versus the Sensex. Year-to-date in FY26, the stock has gained 4.76%, outperforming the Sensex's 1.92% decline, though six-month returns remain negative at -16.47%.
The stock's beta of 1.50 indicates high volatility relative to the market, with 61.50% volatility versus the Sensex's 11.53%. This high-beta characteristic is typical for micro-cap stocks and reflects both growth potential and elevated risk. The negative Sharpe ratio over the past year signals that the stock has not compensated investors adequately for the risk taken, though this may reverse if the fundamental momentum translates into stock price appreciation.
Investment Thesis: Quality Growth at Reasonable Price
Unifinz Capital's investment case rests on four pillars: exceptional growth momentum, superior profitability metrics, reasonable valuation, and improving quality credentials. The company has demonstrated its ability to scale rapidly whilst maintaining and even expanding margins, a rare combination in the NBFC sector. The current quality grade of "Average" reflects the company's relatively short operating history in financial services, though the trajectory is clearly positive.
The financial trend classification of "Outstanding" is well-deserved, with the company posting record highs across all key metrics in Q3 FY26. Net sales, operating profit, and PAT all reached new peaks, whilst margins expanded sequentially. This consistent execution over seven consecutive quarters of growth demonstrates management's capability to deliver on its business plan.
The technical trend remains the primary concern, with the stock in a "Bearish" phase since late January 2026. The breakdown below the 200-day moving average and proximity to 52-week lows creates an unfavourable risk-reward setup for momentum-oriented investors. However, for fundamental investors with a 12-18 month horizon, the current technical weakness may present an attractive accumulation opportunity.
Key Strengths & Risk Factors
| ✅ Key Strengths | ⚠️ Key Concerns |
|---|---|
| Hypergrowth Trajectory: 296% YoY revenue growth and 341% YoY profit growth demonstrate exceptional business momentum and market opportunity capture. | Technical Weakness: Stock in bearish trend, trading below all moving averages with 25% decline over past year despite strong fundamentals. |
| Exceptional ROE/ROCE: ROE of 45.94% and ROCE of 36.05% place the company amongst top NBFC performers in capital efficiency. | High Volatility: Beta of 1.50 and 61.50% volatility indicate significant price risk, typical for micro-cap stocks. |
| Margin Expansion: Operating margins improved from 27.87% to 33.48% over past year, demonstrating operational leverage and pricing power. | Limited Operating History: Only 2+ years in NBFC business post-transformation, lacking long-term track record in credit cycles. |
| Attractive Valuation: P/E of 7.98x significantly below industry average of 22x and peers, despite superior growth and ROE profile. | Rising Interest Costs: Interest expenses surged 495% YoY to ₹11.02 crores, reflecting aggressive leverage to fund growth. |
| Consistent Execution: Seven consecutive quarters of sequential growth across revenue, profit, and margins demonstrate reliable execution capability. | Asset Quality Unknown: Absence of disclosed NPA data prevents assessment of credit quality in rapidly expanding loan book. |
| Strong Capital Base: Shareholder funds increased to ₹77.55 crores from ₹3.70 crores, providing foundation for continued growth. | Negative Operating Cash Flow: ₹30 crores negative OCF in FY25 due to working capital expansion, indicating potential funding needs. |
| Operating Leverage: Employee costs declining as percentage of sales (16.73% to 4.84%), demonstrating scale benefits. | Micro-Cap Liquidity: Market cap of ₹456 crores with low daily volumes (7,126 shares) creates liquidity risk for larger investors. |
Outlook: What to Watch
| 🟢 Positive Catalysts | 🔴 Red Flags |
|---|---|
| Sustained Growth Momentum: If Q4 FY26 delivers similar growth rates, annual run-rate could exceed ₹500 crores in sales. | Margin Compression: Any sequential decline in operating margins below 30% would signal pricing pressure or asset quality stress. |
| Asset Quality Disclosure: Transparent reporting of NPA levels and provision coverage would build investor confidence. | Rising Credit Costs: Increase in provisioning or write-offs as loan book seasons could pressure profitability. |
| Technical Reversal: Reclaim of 200-day MA (₹112.91) would signal trend change and attract momentum buyers. | Funding Stress: Inability to raise capital or secure credit lines at reasonable rates could constrain growth. |
| Institutional Interest: Current 19.86% institutional holding provides room for increased FII/MF participation. | Regulatory Scrutiny: Any RBI concerns about growth pace or underwriting standards could trigger corrections. |
| Sector Tailwinds: NBFC sector outperformance (19.84% vs Sensex 7.07%) could lift all boats including Unifinz. | Macro Headwinds: Rising interest rates or economic slowdown could impact loan demand and asset quality simultaneously. |
The Verdict: Compelling Value for Patient Investors
Score: 51/100
For Fresh Investors: The combination of explosive growth (341% profit increase), exceptional profitability (45.94% ROE), and attractive valuation (7.98x P/E) creates a compelling opportunity, but the bearish technical trend and proximity to 52-week lows warrant caution. Investors with high risk tolerance and 18-24 month horizon can consider accumulating in tranches, starting with 40-50% allocation near current levels (₹95-100) and averaging down if the stock tests ₹90 support. Wait for technical stabilisation above ₹105 for confirmation of trend reversal.
For Existing Holders: Continue holding with conviction. The Q3 FY26 results validate the growth story and demonstrate sustainable unit economics. The recent price weakness appears disconnected from fundamentals and likely reflects profit-booking or sector rotation. Use any further weakness below ₹90 to add to positions. Maintain holdings for at least 12-18 months to allow the growth story to compound and valuation re-rating to occur.
Fair Value Estimate: ₹140-160 (43-63% upside) based on FY27 earnings estimates of ₹100-110 crores at 14-16x P/E, reflecting a discount to industry average given the company's shorter track record but premium to current valuation given superior growth and ROE 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. Investments in micro-cap stocks carry significant risks including liquidity risk, volatility, and potential loss of capital.
