Yogi Ltd Q3 FY26: Sharp Profit Decline Raises Concerns Despite Revenue Growth

The quarter's performance represents a concerning reversal from the company's strong showing in Q2 FY26, when net profit stood at ₹9.29 crores. The sequential collapse in profitability, coupled with a 57.46% drop in net sales to ₹57.25 crores from ₹134.59 crores in the previous quarter, suggests significant operational challenges. The company, which transitioned from investment advisory services to real estate development and financial services, appears to be grappling with revenue volatility and margin compression.

For the nine-month period ended December 2025 (9M FY26), Yogi Ltd posted consolidated net profit of ₹17.08 crores on revenue of ₹282.13 crores, representing substantial growth from minimal operations in the prior year. However, the sharp quarterly decline has raised questions about the quality and sustainability of these earnings.

Financial Performance: Margin Compression and Revenue Volatility

The quarterly trend reveals extreme revenue volatility, with net sales swinging from nil operations in FY25's first three quarters to ₹111.07 crores in Q4 FY25, before oscillating between ₹57.25 crores and ₹134.59 crores in FY26. This erratic pattern suggests the company's business model may be project-based or transaction-dependent, creating inherent unpredictability in financial performance.

Operating profit margin (excluding other income) in Q3 FY26 stood at 5.83%, down from 9.46% in Q2 FY26, indicating deteriorating operational efficiency. The operating profit before depreciation, interest, and tax (PBDIT) excluding other income fell to ₹3.34 crores from ₹12.73 crores sequentially, a 73.76% decline. Interest costs surged to ₹2.09 crores in Q3 FY26 from ₹0.49 crores in Q2 FY26, reflecting increased leverage and working capital requirements.

A concerning aspect of the quarter's performance is the disproportionate contribution of other income to profitability. Other income of ₹1.52 crores represented 58.69% of profit before tax (₹2.59 crores) in Q3 FY26, suggesting the company's core operations are struggling to generate sustainable profits. This heavy reliance on non-operating income raises questions about the quality of earnings and the viability of the underlying business model.

Balance Sheet Concerns: Leverage and Working Capital Strain

Yogi Ltd's balance sheet as of March 2025 reveals significant structural concerns. Total shareholder funds stood at ₹112.57 crores, comprising share capital of ₹40.96 crores and reserves of ₹68.37 crores. However, current liabilities surged to ₹360.93 crores from just ₹3.17 crores a year earlier, driven primarily by trade payables of ₹314.07 crores. This dramatic increase in current liabilities relative to current assets of ₹478.35 crores suggests the company has been funding aggressive expansion through short-term credit.

The company's debt-to-equity ratio of 0.87 reflects moderate leverage, with long-term debt of ₹15.13 crores remaining relatively stable. However, the surge in short-term liabilities and negative operating cash flow suggest potential stress on the balance sheet. The company's book value per share stands at ₹26.69, significantly below the current market price of ₹161.40, implying a price-to-book ratio of 5.11x—a substantial premium for a company with weak return on equity.

Profitability Metrics: Weak Returns Despite Growth

Yogi Ltd's return on equity (ROE) presents a mixed picture. The latest quarter ROE of 12.83% appears respectable, but the average ROE over recent periods stands at just 3.27%, indicating historically weak capital efficiency. For an NBFC, where efficient capital deployment is paramount, this low average ROE suggests the company has struggled to generate adequate returns on shareholder capital.

The company's return on capital employed (ROCE) of 8.49% similarly reflects suboptimal asset utilisation. These profitability metrics, when combined with the extreme revenue volatility and negative operating cash flows, paint a picture of a company in transition that has yet to establish a stable, profitable business model. The five-year sales growth of 220.24% and EBIT growth of 89.91% reflect the company's emergence from dormancy, but these growth rates are calculated from a negligible base and do not indicate sustainable momentum.

Peer Comparison: Premium Valuation Without Justification

Yogi Ltd's valuation metrics appear stretched relative to peers. Trading at a P/E ratio of 39.80x, the company commands a significant premium to the NBFC industry average of 22x, despite delivering an ROE of just 3.27%—substantially below peers like Aryaman Financial Services (15.68% ROE) and Manba Finance (10.84% ROE). The price-to-book ratio of 5.11x ranks amongst the highest in the peer group, matched only by Aryaman Financial Services at 5.29x, which justifies its premium through superior return on equity.

The valuation disconnect becomes more apparent when considering that Yogi Ltd offers no dividend yield, maintains moderate leverage, and has demonstrated inconsistent profitability. Whilst the company has shown growth from a low base, the quality of earnings and sustainability of the business model remain questionable. Investors appear to be pricing in significant future growth that has yet to materialise in consistent operational performance.

Valuation Analysis: Expensive Despite Deteriorating Fundamentals

At the current market price of ₹161.40, Yogi Ltd trades at elevated multiples across key valuation parameters. The P/E ratio of 39.80x represents a 81% premium to the industry average of 22x, whilst the EV/EBITDA multiple of 37.80x and EV/EBIT of 37.87x similarly reflect premium pricing. The PEG ratio of 0.01 appears attractive on the surface, but this metric is distorted by the company's emergence from near-zero operations and does not reflect sustainable growth dynamics.

The company's valuation grade has fluctuated significantly, currently assessed as "Fair" after being downgraded from "Very Expensive" in October 2025. This volatility in valuation assessment reflects the difficulty in establishing a stable fair value for a company with such erratic financial performance. The stock trades 22.40% below its 52-week high of ₹208.00, but remains 82.54% above its 52-week low of ₹88.42, suggesting significant price volatility.

Given the weak average ROE of 3.27%, negative operating cash flows, and deteriorating quarterly performance, the current valuation appears unjustified. A fair value estimate based on peer multiples and quality metrics would suggest a P/BV ratio of 1.5-2.0x for a company of this quality profile, implying a fair value range of ₹40-53 per share—representing potential downside of 67-75% from current levels.

Shareholding Pattern: Promoter-Dominated with Zero Institutional Interest

Yogi Ltd's shareholding pattern reveals a promoter-dominated structure with 61.09% holding as of December 2025, up from 59.00% in March 2025. The 2.09 percentage point increase in promoter holding during Q1 FY26 suggests promoter confidence, though it has remained stable since then. Importantly, there is no promoter pledging, which eliminates one potential risk factor.

However, the complete absence of institutional investors—zero holdings from foreign institutional investors (FIIs), mutual funds, insurance companies, and other domestic institutional investors—represents a significant red flag. The lack of institutional participation indicates that professional investors have not found the company's fundamentals, governance, or growth prospects compelling enough to warrant investment. The 38.91% non-institutional holding consists entirely of retail and non-institutional investors, suggesting the stock may be driven more by speculation than fundamental value.

Stock Performance: Exceptional Long-Term Gains Mask Recent Weakness

Yogi Ltd's stock performance presents a stark contrast between exceptional long-term gains and recent weakness. Over five years, the stock has delivered an extraordinary return of 2,945.28%, massively outperforming the Sensex return of 77.74% by 2,867.54 percentage points. The three-year return of 588.27% and two-year return of 307.16% similarly demonstrate phenomenal appreciation, likely driven by the company's transition from dormancy to active operations.

However, recent performance tells a different story. The stock has declined 12.40% over six months and 6.52% over three months, underperforming the Sensex in both periods. The one-year return of 62.28% remains strong, outperforming the NBFC sector return of 20.22% by 42.06 percentage points, but the negative momentum in recent quarters suggests investors are reassessing the company's prospects following the Q3 FY26 results.

The stock's beta of 1.50 indicates high volatility relative to the market, with annualised volatility of 41.91% classifying it as a high-risk, high-return investment. The risk-adjusted return of 1.49 over one year compares favourably to the Sensex's 0.64, but this metric is heavily influenced by the strong one-year performance and may not reflect current risk-reward dynamics given deteriorating fundamentals.

Technical Analysis: Mildly Bearish Trend with Multiple Resistance Levels

From a technical perspective, Yogi Ltd's stock exhibits a mildly bearish trend as of January 29, 2026, having shifted from a bearish trend the previous day. The stock trades below all major moving averages—5-day MA at ₹161.58, 20-day MA at ₹158.21, 50-day MA at ₹162.25, 100-day MA at ₹167.89, and 200-day MA at ₹164.15—indicating weak near-term momentum despite the slight uptick on January 30, 2026.

Key technical indicators present mixed signals. The weekly MACD remains bearish whilst the monthly MACD shows bullish signals, suggesting conflicting short-term and medium-term momentum. The Bollinger Bands indicator is bearish on a weekly basis but bullish monthly, whilst the KST (Know Sure Thing) oscillator similarly shows weekly bearishness against monthly bullishness. The Dow Theory indicates no clear trend on a weekly basis and mild bearishness monthly.

Immediate support lies at the 52-week low of ₹88.42, a substantial 45% below current levels, whilst immediate resistance sits at the 20-day moving average area of ₹158.21. Major resistance levels include the 100-day MA at ₹167.89, the 200-day MA at ₹164.15, and the 52-week high of ₹208.00. The stock's distance of 22.40% from its 52-week high suggests it has lost considerable momentum from its peak.

Investment Thesis: Speculative Play Without Fundamental Support

Yogi Ltd's investment thesis rests on shaky foundations. The company's Mojo score of 27/100 places it firmly in "Strong Sell" territory, reflecting fundamental weaknesses across multiple parameters. The overall quality assessment of "Below Average," weak profitability metrics (average ROE of 3.27%), and complete absence of institutional holdings all point to a company that fails to meet basic investment criteria.

The short-term financial trend is classified as "Positive" based on nine-month performance, but this assessment is undermined by the sharp Q3 FY26 deterioration. The technical trend of "Mildly Bearish" adds to concerns, whilst the "Very Expensive" historical valuation grade (recently downgraded to "Fair") suggests the market has been pricing in optimism that fundamentals have failed to deliver.

Key concerns limiting the investment case include the stock's bearish technical trend, weak long-term fundamental strength with an average ROE of just 3.27%, extreme revenue volatility, negative operating cash flows, and heavy reliance on non-operating income. The company's business model appears project-based or transaction-dependent, creating inherent unpredictability that makes financial forecasting extremely difficult.

Key Strengths & Risk Factors

Outlook: Critical Monitoring Points Ahead

The path forward for Yogi Ltd requires demonstrable evidence of business model stability, consistent profitability, and improved operational cash generation. The company must prove that its transition from dormancy to active operations represents a sustainable business rather than sporadic, project-based revenue. Until such evidence emerges, the investment case remains highly speculative and unsuitable for risk-averse investors.