B N Rathi Securities Ltd Valuation Shifts to Very Attractive Amidst Market Challenges

Valuation Metrics Show Marked Improvement

As of 3 February 2026, B N Rathi Securities trades at ₹14.80, down 1.73% on the day and significantly off its 52-week high of ₹53.98. The stock’s P/E ratio stands at 10.86, a level that is considerably lower than many of its NBFC peers, some of which are trading at P/E multiples exceeding 100 or are loss-making, rendering P/E comparisons inapplicable. The company’s P/BV ratio is 0.84, indicating the stock is trading below its book value, a rarity in the current NBFC sector where many peers command premiums well above book.

These valuation metrics have prompted a reclassification of B N Rathi Securities’ valuation grade from “attractive” to “very attractive” by MarketsMOJO, reflecting the stock’s improved price appeal. This upgrade comes despite the company’s negative return on capital employed (ROCE) of -1.81%, which highlights ongoing operational challenges. However, the return on equity (ROE) remains positive at 7.74%, suggesting some shareholder value generation despite the broader profitability concerns.

Comparative Analysis with Peers

When compared with its peer group within the NBFC sector, B N Rathi Securities stands out for its valuation discount. For instance, Colab Platforms trades at an exorbitant P/E of 790.72 and an EV/EBITDA multiple of 1860.76, while Meghna Infracon’s P/E is 132.83. Several peers, including LKP Finance and Avishkar Infra, are currently loss-making, further emphasising the relative value proposition of B N Rathi Securities.

Other NBFCs such as 5Paisa Capital and Abans Financial also show “very attractive” valuations but trade at higher P/E ratios of 24.16 and 8.46 respectively, with more positive EV/EBITDA multiples. This positions B N Rathi Securities as one of the most undervalued stocks in the sector on a price-to-earnings basis, albeit with some operational risks reflected in its negative EV/EBIT and EV/Sales ratios.

Stock Performance and Market Context

Despite the attractive valuation, B N Rathi Securities has endured a challenging price performance over recent periods. The stock has declined 68.65% over the past year, sharply underperforming the Sensex, which gained 5.37% in the same timeframe. Year-to-date, the stock is down 11.00%, compared to a 4.17% decline in the Sensex. Even over shorter intervals, such as one month and one week, the stock has lagged the broader market, falling 14.10% and 2.76% respectively.

However, the longer-term returns tell a more positive story. Over three years, B N Rathi Securities has delivered a 71.59% return, nearly doubling the Sensex’s 36.26% gain. Over five and ten years, the stock has outperformed the benchmark with returns of 135.39% and 190.20% respectively, underscoring its potential for recovery and growth if operational issues are addressed.

Financial Health and Profitability Concerns

While valuation metrics have improved, the company’s negative EV to EBIT (-54.19) and EV to EBITDA (-39.85) ratios indicate ongoing earnings pressure. These negative enterprise value multiples reflect losses at the operating level, which investors should weigh carefully against the stock’s low price multiples. The EV to capital employed ratio of 1.28 is more neutral, suggesting that the company’s capital base is not excessively overvalued.

Dividend yield at 3.36% offers some income cushion for investors, but the negative ROCE signals that the company is currently not generating adequate returns on its invested capital. This operational weakness is a key reason why MarketsMOJO has assigned a “Strong Sell” mojo grade of 17.0, recently downgraded from “Sell” on 18 February 2025, reflecting deteriorating quality scores despite valuation improvements.

Implications for Investors

The shift to a very attractive valuation grade suggests that B N Rathi Securities may be undervalued relative to its intrinsic worth and sector peers. For value investors willing to tolerate near-term operational risks, the stock’s low P/E and P/BV ratios could represent a buying opportunity, especially given its long-term outperformance versus the Sensex.

However, the negative profitability metrics and recent downgrades in mojo grade caution that the company’s turnaround is not assured. Investors should monitor upcoming quarterly results and management commentary closely to assess whether operational improvements materialise and whether the company can restore positive returns on capital.

Conclusion: Valuation Appeal Balanced by Operational Risks

B N Rathi Securities Ltd’s recent valuation upgrade to “very attractive” reflects a significant shift in price attractiveness, driven by low P/E and P/BV ratios relative to peers and historical levels. This repositioning offers a potential entry point for investors focused on value in the NBFC sector.

Nevertheless, the company’s negative operating profitability and downgraded mojo grade underscore the importance of caution. The stock’s recent underperformance and weak ROCE highlight ongoing challenges that must be resolved to justify a sustained recovery in share price.

Investors should weigh the compelling valuation against these risks and consider the stock’s long-term track record of outperformance versus the Sensex. Close monitoring of financial results and sector developments will be essential to assess whether B N Rathi Securities can convert its valuation appeal into meaningful shareholder returns.

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