B N Rathi Securities Ltd Valuation Shifts Signal Changing Market Sentiment

Valuation Metrics Signal Improved Price Attractiveness

As of 16 Feb 2026, B N Rathi Securities Ltd trades at a P/E ratio of 8.84, which is significantly lower than many of its NBFC peers, such as Mufin Green (P/E 107.53) and Arman Financial (P/E 61.52). This low P/E ratio indicates that the stock is priced attractively relative to its earnings, especially when compared to the sector’s more expensive names. The company’s P/BV ratio stands at 0.86, suggesting the stock is trading below its book value, a factor that often appeals to value investors seeking undervalued opportunities.

These valuation improvements have been recognised in the company’s upgraded valuation grade, moving from very attractive to attractive. This upgrade reflects a more favourable price entry point for investors, especially when contrasted with peers like Satin Creditcare, which also holds an attractive valuation with a similar P/E of 8.86, and Dolat Algotech at 11.49.

Financial Performance and Profitability Concerns

Despite the improved valuation, B N Rathi Securities’ profitability metrics remain subdued. The company’s return on capital employed (ROCE) is negative at -1.81%, indicating operational inefficiencies or challenges in generating returns from its capital base. However, the return on equity (ROE) is a more encouraging 7.74%, suggesting some level of profitability for shareholders, albeit modest.

Enterprise value (EV) multiples paint a complex picture. The EV to EBIT and EV to EBITDA ratios are negative (-17.39 and -14.75 respectively), signalling losses at the operating level. This contrasts with some peers like Satin Creditcare, which maintains positive EV/EBITDA of 6.07, and SMC Global Securities at 3.8, highlighting the operational challenges B N Rathi faces.

Stock Price Movement and Market Returns

B N Rathi Securities closed at ₹15.20 on 16 Feb 2026, up 3.47% on the day, with a 52-week trading range between ₹14.00 and ₹36.00. The stock’s recent price recovery from its lows is a positive sign, but it remains significantly below its 52-week high, reflecting lingering investor caution.

Examining returns relative to the Sensex reveals a mixed trend. Over the past week, the stock outperformed the benchmark with a 4.25% gain versus the Sensex’s -1.14%. However, over longer periods, the stock has underperformed sharply: a 1-month return of -4.70% against Sensex’s -1.20%, and a year-to-date decline of -8.60% compared to the Sensex’s -3.04%. The most striking underperformance is over the last year, with B N Rathi down 53.37% while the Sensex gained 8.52%.

Longer-term returns tell a more positive story, with the stock delivering 55.70% over three years and an impressive 133.85% over five years, both outperforming the Sensex’s respective 36.73% and 60.30%. Over a decade, the stock’s 257.65% return closely matches the Sensex’s 259.46%, indicating strong historical growth despite recent volatility.

Peer Comparison Highlights Valuation Advantage

Within the NBFC sector, B N Rathi Securities stands out for its attractive valuation metrics. While companies like Ashika Credit and Arman Financial are classified as very expensive with P/E ratios exceeding 60 and EV/EBITDA multiples soaring above 9 and 95 respectively, B N Rathi’s P/E of 8.84 and EV/EBITDA of -14.75 (reflecting losses) position it as a more affordable option for value-focused investors.

Other peers such as Mufin Green and Saraswati Commercial are also very expensive, trading at P/E multiples above 15 and EV/EBITDA multiples above 12, which may deter price-sensitive investors. Conversely, companies like Satin Creditcare and Dolat Algotech share similar attractive valuations, though their operational metrics differ.

It is important to note that some peers, including LKP Finance and Avishkar Infra, are classified as risky due to loss-making operations, which is a cautionary signal for investors evaluating the sector’s landscape.

Market Capitalisation and Analyst Ratings

B N Rathi Securities holds a market capitalisation grade of 4, indicating a mid-sized market cap relative to its sector peers. The company’s Mojo Score currently stands at 29.0, with a Mojo Grade of Strong Sell, upgraded from Sell on 18 Feb 2025. This rating reflects the cautious stance analysts maintain due to the company’s operational challenges and recent underperformance despite improved valuation metrics.

The divergence between valuation attractiveness and the Strong Sell rating underscores the importance of considering both price and quality factors in investment decisions. While the stock may appear cheap on a P/E and P/BV basis, underlying profitability issues and negative operating cash flows temper enthusiasm.

Dividend Yield and Investor Appeal

Adding to the stock’s appeal is a dividend yield of 3.27%, which provides a modest income stream for investors amid the company’s valuation attractiveness. This yield is competitive within the NBFC sector, where dividend payouts can vary widely depending on profitability and capital allocation policies.

However, the negative ROCE and losses at the EBIT and EBITDA levels suggest that dividend sustainability could be a concern if operational performance does not improve. Investors should weigh the dividend yield against the company’s earnings quality and cash flow generation capacity.

Conclusion: Valuation Gains Tempered by Operational Risks

B N Rathi Securities Ltd’s recent upgrade in valuation grade from very attractive to attractive reflects a more compelling price point relative to earnings and book value. The stock’s low P/E and P/BV ratios, combined with a reasonable dividend yield, make it an interesting candidate for value investors seeking exposure to the NBFC sector.

Nevertheless, the company’s negative operating profitability, as evidenced by negative EV/EBIT and EV/EBITDA multiples, alongside a negative ROCE, signals ongoing operational challenges. The Strong Sell Mojo Grade further emphasises the need for caution, as the stock’s recent underperformance relative to the Sensex and peers highlights risks that valuation alone does not capture.

Investors should consider these factors carefully, balancing the stock’s attractive price against its quality and growth prospects. Peer comparisons suggest that while B N Rathi offers valuation advantages, alternative NBFC stocks may provide better operational stability and growth potential.

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