The stock closed at ₹29.79 on February 13, 2026, down 0.37% from the previous close, trading below all key moving averages and reflecting investor concerns about the company's deteriorating financial trajectory. With a current valuation of 20 times trailing earnings and a price-to-book ratio of 0.52, United Credit faces mounting pressure to reverse its revenue decline and restore profitability momentum.
Financial Performance: Margin Compression Amid Revenue Headwinds
United Credit's Q3 FY26 financial performance reveals deepening operational challenges. Net sales of ₹0.77 crores represent the lowest quarterly revenue in recent periods, declining 1.32% sequentially from ₹0.76 crores in Q2 FY26 and contracting 13.48% year-on-year from ₹0.89 crores in Q3 FY25. This marks the third consecutive quarter of year-on-year revenue decline, with Q2 FY26 recording a 13.64% YoY drop and Q1 FY26 showing a 14.94% YoY contraction.
| Quarter | Net Sales (₹ Cr) | QoQ Change | YoY Change | Net Profit (₹ Cr) | PAT Margin |
|---|---|---|---|---|---|
| Dec'25 (Q3) | 0.77 | +1.32% | -13.48% | 0.16 | 20.78% |
| Sep'25 (Q2) | 0.76 | +2.70% | -13.64% | 0.23 | 30.26% |
| Jun'25 (Q1) | 0.74 | -8.64% | -14.94% | 0.25 | 33.78% |
| Mar'25 (Q4) | 0.81 | -8.99% | — | 0.05 | 6.17% |
| Dec'24 (Q3) | 0.89 | +1.14% | — | 0.27 | 30.34% |
| Sep'24 (Q2) | 0.88 | +1.15% | — | 0.43 | 48.86% |
| Jun'24 (Q1) | 0.87 | — | — | 0.26 | 29.89% |
The profitability picture is equally concerning. Operating profit (PBDIT excluding other income) stood at ₹0.22 crores in Q3 FY26, representing a 26.67% sequential decline from ₹0.30 crores in Q2 FY26 and a 42.11% year-on-year drop from ₹0.38 crores. Operating margin (excluding other income) compressed to 28.57% in Q3 FY26 from 39.47% in Q2 FY26, marking a significant 1,090 basis point deterioration quarter-on-quarter. Year-on-year, the operating margin contracted by 1,413 basis points from 42.70% in Q3 FY25.
Net profit of ₹0.16 crores in Q3 FY26 translates to a profit after tax margin of 20.78%, down from 30.26% in Q2 FY26 and 30.34% in Q3 FY25. The sequential decline of 30.43% in net profit and the 40.74% year-on-year contraction underscore the intensifying pressure on the company's bottom line. Employee costs remained relatively stable at ₹0.20 crores in Q3 FY26, representing 25.97% of net sales, up from 26.32% in Q2 FY26.
Critical Profitability Alert
United Credit's PAT margin has collapsed from 48.86% in Sep'24 to 20.78% in Dec'25, a deterioration of 2,808 basis points in just five quarters. The combination of revenue decline and margin compression signals fundamental operational stress requiring immediate management attention.
Capital Efficiency: Weak Returns Signal Structural Challenges
United Credit's capital efficiency metrics paint a sobering picture of underlying business quality. The company's latest return on equity (ROE) stands at just 2.63%, well below acceptable thresholds for financial services companies and indicative of poor capital deployment. The five-year average ROE of 3.56% confirms this is not a temporary aberration but a persistent structural weakness. Higher ROE indicates better capital efficiency and profitability, making United Credit's single-digit returns particularly concerning for potential investors.
Return on capital employed (ROCE) tells a similar story, registering at 3.00% as of the latest quarter. This anaemic return on deployed capital suggests the company is struggling to generate meaningful profits from its asset base. For context, well-managed NBFCs typically deliver ROE in the 12-18% range and ROCE above 10%, making United Credit's performance significantly below industry standards.
The company's balance sheet does show one redeeming feature: minimal leverage. With a debt-to-equity ratio of just 0.01, United Credit carries virtually no financial debt, providing a cushion against downside risks. However, this conservative capital structure has not translated into superior returns, raising questions about management's ability to deploy capital productively. The company's price-to-book ratio of 0.52 suggests the market ascribes limited value to the company's net assets, reflecting scepticism about future earnings potential.
Quality Assessment: Below Average Fundamentals
United Credit receives a "Below Average" quality grade based on long-term financial performance. Key weaknesses include 5-year sales growth of just 2.63%, 5-year EBIT growth of -3.80%, average ROE of 3.56%, and minimal institutional holdings of 0.53%. The company's quality status has remained "Below Average" since November 2025, with no institutional investor confidence to provide validation.
Peer Comparison: Underperforming on Profitability Metrics
Comparing United Credit to its peer group within the non-banking financial company sector reveals relative positioning across key metrics. The company's ROE of 3.56% stands above the peer average of approximately 1.00%, providing some consolation, though this remains well below acceptable levels for the sector. United Credit's price-to-earnings ratio of 19.84 times appears reasonable compared to peers like NPR Finance (88.20x), Gujarat Lease Finance (424.52x), and Tokyo Finance (274.74x), though several peers are loss-making or trading at extreme multiples.
| Company | P/E (TTM) | P/BV | ROE (%) | Debt/Equity | Market Cap |
|---|---|---|---|---|---|
| United Credit | 19.84 | 0.52 | 3.56% | 0.01 | ₹16 Cr |
| NPR Finance | 88.20 | 0.35 | 0.36% | 0.01 | — |
| Gujarat Lease Finance | 424.52 | -4.15 | 0.00% | -2.45 | — |
| J J Finance Corp | NA (Loss Making) | 1.68 | 2.70% | 0.00 | — |
| Tokyo Finance | 274.74 | 1.42 | 0.00% | 0.00 | — |
| SRG Fingrow Finance | 15.32 | — | — | — | — |
United Credit's price-to-book ratio of 0.52 sits in the middle of the peer range, higher than NPR Finance (0.35) but significantly below J J Finance Corp (1.68) and Tokyo Finance (1.42). The company's minimal leverage (debt-to-equity of 0.01) matches the conservative capital structures of NPR Finance and Tokyo Finance, though this has not translated into superior profitability. With a market capitalisation of ₹16 crores, United Credit ranks sixth among its peer group, reflecting its micro-cap status and limited institutional following.
Valuation Analysis: Fair Value Masks Deteriorating Fundamentals
United Credit currently trades at a P/E ratio of 19.84 times trailing twelve-month earnings, below the industry average P/E of 23 times, suggesting a modest valuation discount to the broader NBFC sector. The price-to-book ratio of 0.52 indicates the stock trades at nearly half its book value, typically a sign of either distress or market scepticism about asset quality and future earnings power. In United Credit's case, the discount appears warranted given the deteriorating financial trajectory.
The company's valuation grade stands at "Fair" as of February 13, 2026, having transitioned from "Very Expensive" to "Fair" on July 31, 2025. This classification suggests the stock is reasonably valued at current levels, though investors should note that "fair" valuation does not equate to attractive investment opportunity, particularly when fundamentals are deteriorating. The EV/EBITDA multiple of 15.56 times and EV/Sales of 4.91 times appear elevated for a company experiencing revenue contraction and margin compression.
The stock currently trades at ₹29.79, down 30.72% from its 52-week high of ₹43.00 and up 16.37% from its 52-week low of ₹25.60. The technical picture shows the stock trading below all major moving averages (5-day, 20-day, 50-day, 100-day, and 200-day), with immediate resistance at ₹29.23 (20-day moving average) and support at ₹25.60 (52-week low). The stock's dividend yield is not applicable, with the last dividend of ₹0.70 per share paid in September 2019, more than six years ago.
Shareholding Pattern: Stable but Uninspiring Ownership Structure
United Credit's shareholding pattern has remained remarkably stable over the past five quarters, with no changes in ownership distribution across any investor category. Promoter holding stands at 57.31% as of December 2025, unchanged from September 2025, June 2025, March 2025, and December 2024. The promoter group, led by Dabriwala Banijya Udyog Limited (43.16%) and Ashok Kumar Dabriwala (13.86%), maintains majority control with no pledging of shares, providing some governance comfort.
| Category | Dec'25 | Sep'25 | Jun'25 | Mar'25 | Dec'24 |
|---|---|---|---|---|---|
| Promoter | 57.31% | 57.31% | 57.31% | 57.31% | 57.31% |
| FII | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
| Mutual Funds | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
| Insurance | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
| Other DII | 0.53% | 0.53% | 0.53% | 0.53% | 0.53% |
| Non-Institutional | 42.16% | 42.16% | 42.16% | 42.16% | 42.16% |
The complete absence of foreign institutional investor (FII), mutual fund, and insurance company holdings signals a lack of institutional confidence in the company's prospects. Total institutional holdings stand at a meagre 0.53%, comprising only other domestic institutional investors (DII). Non-institutional investors hold 42.16%, indicating retail and high-net-worth individual participation, though the frozen shareholding pattern suggests limited trading activity and poor liquidity.
The static ownership structure over five consecutive quarters, with zero sequential changes across all categories, reflects either market indifference or illiquidity in the stock. For potential investors, the absence of any institutional validation and the lack of ownership dynamics raise concerns about market perception and future liquidity when exit opportunities are needed.
Stock Performance: Significant Underperformance Across Timeframes
United Credit's stock performance reveals persistent underperformance relative to both the broader market and its sector. Over the past year, the stock has declined 9.73%, significantly lagging the Sensex's 8.52% gain, resulting in negative alpha of 18.25 percentage points. This underperformance becomes even more pronounced when compared to the NBFC sector's 24.01% return over the same period, leaving United Credit trailing by 33.74 percentage points.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | -0.03% | -1.14% | +1.11% |
| 1 Month | 6.58% | -1.20% | +7.78% |
| 3 Months | -3.90% | -2.19% | -1.71% |
| 6 Months | 3.08% | 2.59% | +0.49% |
| YTD | 2.83% | -3.04% | +5.87% |
| 1 Year | -9.73% | 8.52% | -18.25% |
| 2 Years | 27.36% | 15.47% | +11.89% |
| 3 Years | 58.88% | 36.73% | +22.15% |
Longer-term performance shows more favourable relative results, with the stock delivering 27.36% returns over two years (alpha of +11.89%) and 58.88% over three years (alpha of +22.15%). However, this historical outperformance has reversed sharply in recent periods, with the one-year underperformance suggesting a fundamental shift in the company's trajectory. The stock's risk-adjusted return of -0.14 over one year, coupled with high volatility of 67.57%, places it in the "high risk, low return" category—an unattractive combination for investors.
The stock's beta of 1.50 indicates it is 50% more volatile than the broader market, amplifying both gains and losses. Recent price action shows the stock trading below all key moving averages, with the technical trend classified as "Mildly Bearish" as of February 3, 2026. The MACD indicator shows bearish signals on both weekly and monthly timeframes, while Bollinger Bands indicate bearish momentum, confirming the negative technical picture.
Investment Thesis: Multiple Red Flags Outweigh Limited Positives
United Credit's investment thesis is severely challenged by deteriorating fundamentals across multiple dimensions. The company's Mojo Score of 31 out of 100 places it firmly in "Sell" territory (upgraded from "Strong Sell" on October 29, 2025), reflecting weak performance across valuation, quality, financial trend, and technical parameters. The quality grade of "Below Average" is supported by anaemic ROE of 3.56%, declining sales growth of 2.63% over five years, and negative EBIT growth of -3.80% over the same period.
The financial trend for Q3 FY26 is classified as "Flat" despite sequential and year-on-year declines in both revenue and profitability—a classification that appears generous given the magnitude of deterioration. Technical indicators uniformly point to weakness, with the stock in a "Mildly Bearish" trend and trading below all major moving averages. The valuation grade of "Fair" provides limited comfort, as it merely suggests the stock is not grossly overvalued rather than representing compelling value.
Key Strengths ✓
- Minimal Leverage: Debt-to-equity ratio of 0.01 provides financial flexibility and downside protection
- Stable Promoter Holding: 57.31% promoter stake with no pledging demonstrates commitment
- Relative ROE Positioning: 3.56% ROE, while weak, exceeds most direct peers in the micro-cap NBFC space
- Reasonable Valuation: P/E of 19.84x below industry average of 23x, P/BV of 0.52x suggests limited downside
- Long Operating History: Established in 1970, providing institutional knowledge and relationships
Key Concerns ⚠
- Persistent Revenue Decline: Three consecutive quarters of double-digit YoY revenue contraction (13-15%)
- Margin Compression: PAT margin collapsed from 48.86% to 20.78% in five quarters
- Weak Capital Efficiency: ROE of 2.63% and ROCE of 3.00% far below acceptable thresholds
- Zero Institutional Interest: No FII, mutual fund, or insurance holdings; total institutional at 0.53%
- Negative Momentum: Stock down 9.73% over one year, underperforming sector by 33.74 percentage points
- High Volatility: Beta of 1.50 and volatility of 67.57% create high-risk profile
- Technical Weakness: Trading below all moving averages with bearish indicators across timeframes
Outlook: Critical Monitoring Points for Potential Reversal
For United Credit to reverse its deteriorating trajectory and regain investor confidence, several critical catalysts would need to materialise. On the positive side, any stabilisation in quarterly revenue trends, improvement in operating margins back towards historical levels of 40%+, and enhancement of ROE towards double digits would signal operational improvement. Management commentary providing clarity on business strategy, asset quality trends, and growth initiatives would be essential to rebuild credibility.
Positive Catalysts
- Revenue stabilisation or growth in Q4 FY26
- Operating margin recovery above 35%
- ROE improvement towards 8-10% range
- Entry of institutional investors (FII/MF)
- Strategic initiatives or business model pivot
Red Flags to Monitor
- Further revenue decline in Q4 FY26
- Additional margin compression below 20%
- Deterioration in asset quality metrics
- Continued absence of institutional buying
- Break below ₹25.60 support level
Conversely, red flags requiring immediate attention include any further deterioration in quarterly revenue, additional compression in operating or net profit margins, signs of asset quality stress, continued absence of institutional investor interest, and technical breakdown below the ₹25.60 support level. Given the company's micro-cap status and limited liquidity, investors should also monitor trading volumes and promoter actions for any unusual patterns.
The Verdict: Fundamental Weakness Warrants Avoidance
Score: 31/100
For Fresh Investors: Avoid initiating positions. The combination of persistent revenue decline, margin compression, weak ROE, and complete absence of institutional validation creates an unattractive risk-reward profile. Better opportunities exist in the NBFC space with stronger fundamentals and positive momentum.
For Existing Holders: Consider exiting on any technical bounce towards ₹31-32 levels. The deteriorating financial trajectory, three consecutive quarters of double-digit revenue decline, and collapsing margins suggest fundamental challenges that may take considerable time to resolve. The lack of institutional interest and high volatility (beta 1.50) add to downside risks.
Rationale: United Credit's Q3 FY26 results reinforce concerns about the company's ability to generate sustainable profits. With ROE at 2.63%, revenue declining 13.48% year-on-year, PAT margins compressing from 30.26% to 20.78% sequentially, and zero institutional holdings, the investment case lacks compelling support. The "Sell" rating (score 31/100) reflects weak fundamentals, deteriorating trends, and unfavourable risk-reward dynamics that justify avoidance or exit.
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.
