Lakshmi Finance Declines 7.49%: Mixed Quarterly Results and Valuation Shift Shape Week

Strong Start on Monday, 9 February

Lakshmi Finance began the week on a positive note, closing at Rs.149.50, a gain of 1.89% from the previous Friday’s close of Rs.146.72. This outpaced the Sensex’s 1.04% rise to 37,113.23, reflecting initial investor optimism. The volume was relatively low at 3,523 shares, suggesting cautious buying interest amid a broadly positive market environment.

Sharp Correction on Tuesday, 10 February

The stock reversed sharply on 10 February, falling 5.51% to Rs.141.27 on increased volume of 7,980 shares. This decline contrasted with the Sensex’s modest 0.25% gain, indicating stock-specific profit-taking or concerns. The drop followed the initial enthusiasm, possibly reflecting investor caution ahead of the company’s quarterly results.

Quarterly Results Bring Mixed Sentiment on Wednesday, 11 February

On 11 February, Lakshmi Finance reported its Q3 FY26 results, signalling a return to profitability after several volatile quarters. The stock gained 1.14% to close at Rs.142.88, slightly outperforming the Sensex’s 0.13% rise. The company posted a Profit Before Tax Less Other Income (PBT LESS OI) of ₹1.91 crore, a 261.2% increase compared to the average of the previous four quarters, and a Profit After Tax (PAT) of ₹1.34 crore, up 348.1%. This marked improvement contributed to a positive shift in the company’s financial trend score from -21 to 3 over three months.

Despite this quarterly recovery, the nine-month figures remained weak, with net sales down 31.05% to ₹9.37 crore and PAT falling 38.16% to ₹3.84 crore. These results underscored ongoing challenges in the NBFC sector, including tightening credit conditions and competitive pressures.

Flat Quarterly Performance Dampens Momentum on Thursday, 12 February

The following day, 12 February, the stock declined 4.05% to Rs.137.09 on volume of 6,293 shares, underperforming the Sensex which fell 0.56%. The company reported a flat quarterly performance amid mixed financial trends. While the quarterly profit metrics showed growth, the longer-term revenue and profit contraction remained a concern. The financial trend score’s modest improvement to neutral 3 suggested stabilisation but not a full recovery. Investors appeared cautious, reflecting the ongoing sectoral headwinds and the company’s struggle to regain consistent growth.

Valuation Shift and Continued Decline on Friday, 13 February

On the final trading day of the week, Lakshmi Finance’s stock price fell a further 0.99% to Rs.135.73 on low volume of 1,467 shares, while the Sensex dropped 1.40%. A notable valuation shift was reported, with the company’s price-to-earnings (P/E) ratio at 34.25 and price-to-book value (P/BV) at 0.68, indicating the stock was trading below book value and becoming more attractive on a relative basis. The enterprise value to EBITDA ratio stood at 34.58, consistent with the P/E multiple, while the EV to capital employed ratio was low at 0.64, reflecting conservative market valuation of the company’s capital base.

Despite this improved valuation, profitability metrics remained challenging, with a negative return on capital employed (ROCE) of -8.73% and a subdued return on equity (ROE) of 1.98%. The dividend yield of 2.19% offered some income appeal but was modest given the risks. The company’s Mojo Score was 20.0 with a Strong Sell grade, reflecting caution among analysts despite the valuation improvement.

Key Takeaways from the Week

Positive Signals: The return to profitability in Q3 FY26, with a 261.2% increase in PBT LESS OI and a 348.1% rise in PAT compared to prior quarters, indicates operational improvements. The financial trend score’s rise from -21 to 3 suggests stabilisation. The valuation shift to a fair grade with a P/BV below 1.0 and a moderate P/E ratio enhances the stock’s price attractiveness relative to peers.

Cautionary Signals: Despite quarterly gains, the nine-month revenue and profit contraction of over 30% highlight persistent sectoral challenges. Negative ROCE and subdued ROE reflect ongoing profitability issues. The stock’s weekly decline of 7.49% and underperformance versus the Sensex’s 0.54% fall underscore investor caution. The Mojo Score of 20.0 with a Strong Sell rating signals continued analyst scepticism.

Conclusion: A Week of Mixed Signals Amid Sectoral Headwinds

Lakshmi Finance & Industrial Corporation Ltd’s week was characterised by a volatile share price trajectory influenced by mixed financial results and valuation adjustments. The return to quarterly profitability was a welcome development, yet the longer-term revenue and profit declines remain a significant concern. The improved valuation metrics offer some price appeal, but fundamental profitability challenges and weak relative market performance temper optimism.

Investors should note the company’s cautious financial trend and the Strong Sell Mojo Grade, reflecting the need for sustained operational improvements before a more positive outlook can be justified. The stock’s underperformance relative to the Sensex this week highlights the risks inherent in the current market environment for NBFCs like Lakshmi Finance.

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