At a Glance
Arihant Capital just dropped its Q1FY26 numbers. Sales were flat QoQ at ₹51 Cr, but net profit rose 62% sequentially to ₹13 Cr on stronger margins (40% OPM). While business seems stable, the stock fell over 5% post-results. Maybe the market expected a little more “Angel One energy”?
📞 So, What Just Happened?
- 🧾 Revenue: ₹51 Cr (flat vs ₹46 Cr in Q4FY25, down 30% YoY)
- 💰 Net Profit: ₹13 Cr (up 62% QoQ, down 2% YoY)
- ⚙️ OPM: Jumped to 40% vs 32% last quarter
- 💣 Stock Reaction: -5.3% on July 8, 2025
- 🧢 Market Cap: ₹877 Cr
- 💸 QIP Alert: Board has approved equity fund raise via QIP/preferential allotment route
🔍 Zoom Out: 5-Quarter Trend
| Quarter | Sales (₹ Cr) | Net Profit (₹ Cr) | OPM % |
|---|---|---|---|
| Jun ’24 | 73 | 19 | 41% |
| Sep ’24 | 76 | 20 | 40% |
| Dec ’24 | 52 | 12 | 32% |
| Mar ’25 | 46 | 8 | 32% |
| Jun ’25 | 51 | 13 | 40% |
💡 TL;DR: Revenue’s still recovering from the year-end dip, but margins are strong, and profits are moving in the right direction.
🏦 What’s Driving This?
- Operating Costs Controlled: Despite flattish topline, expenses dropped to ₹30 Cr from ₹31 Cr last quarter. Classic broking trick – survive on efficiency.
- Other Income Flat: ₹1 Cr vs ₹0 in Q4. So no one-time magic.
- No EPS fireworks: ₹1.22/share – better than Q4 (₹0.74) but way below H1FY25 (₹2.37)
📢 What the Board’s Up To
🎯 Equity Fundraise Approved
Arihant’s board is now looking to raise capital via QIP or preferential issue. Translation: “We need more ammo to grow or survive volatility.”
🗓️ EGM on July 31, 2025
To get shareholders to bless this funding spree.
🔢 Valuation Check
- 👨💼 P/E Ratio: 17.5x TTM
- 📚 Book Value: ₹36.9 → P/BV = 2.28x
- 💰 ROE (TTM): 15.9%
- 💡 Fair Value Estimate:
- Assuming ₹5.5–6 EPS base for FY26E
- Fair P/E range = 12–16x
- FV Range = ₹66–₹96
📉 CMP = ₹84.1 — So market seems to be pricing in mild growth and QIP dilution risk.
🧬 Peer Pressure Hits Hard
| Player | Net Profit (Qtr) | OPM % | ROE % | CMP / BV | P/E |
|---|---|---|---|---|---|
| Angel One | ₹174 Cr | 38% | 27% | 4.33 | 20.8x |
| IIFL Securities | ₹128 Cr | 41% | 33% | 4.14 | 14.6x |
| Share India | ₹18.6 Cr | 35.7% | 16% | 1.64 | 11.7x |
| Monarch Networth | ₹24.7 Cr | 66.3% | 26.1% | 3.63 | 19.4x |
| Arihant Capital | ₹13 Cr | 40% | 15.9% | 2.28 | 17.5x |
👀 Verdict: Good margins, but too small to command premium multiples like Angel or Nuvama. Needs scale-up story.
🚨 Red Flags (Not Red Enough, But…)
- 💣 Contingent Liabilities: ₹295 Cr 👀
- 🧾 Promoter Holding Dip: From 74.5% → 69.8% in 2 years
- 💸 High Cost of Borrowing: Despite decent ROCE (21%)
📈 Chart Time?
Would you like a 5-quarter profit trend or peer valuation graph for Insta/LinkedIn? I can generate it in a click.
🎯 EduInvesting Verdict™
Arihant’s Q1FY26 was a margin-fueled recovery, but topline still hasn’t found its mojo. With a QIP in the works, market is playing cautious. If they can deploy the new capital well (read: expand tech, client base, AUM), re-rating can happen.
Until then, it remains a decent regional broking + PMS play…
Not Angel One.
Not 360 ONE.
But not trash either.
✍️ Written by Prashant | 📅 8 July 2025
Tags: Arihant Capital, Q1FY26 Results, Broking Stocks, Angel One, PMS, Equity Raise, QIP, Smallcap Financials, EduInvesting Style, ROE, Peer Comparison, Motilal Oswal, IIFL
