LKP Finance Ltd: 174% 1-Year Return, But Core Business Missing in Action
1. At a Glance
LKP Finance looks like that kid in school who got 174% marks in annual exams but can’t solve 2+2 during viva. Stock is flying, promoters are partying, but the core business — lending and broking — is crawling like a traffic jam on Western Express Highway. Sales are down 84% YoY, profit is gasping, and yet the market is treating it like the next CRISIL.
2. Introduction
Welcome to the circus called NBFC smallcaps. Here’s the script:
Company books look thinner than my engineering notes.
Stock price goes from ₹175 to ₹600 in one year.
ROE sits at 1% (basically FD return in disguise).
P/E at 196x, which even Ambani won’t charge for Jio data.
So, how do we explain LKP Finance? A 200+ city presence, brokerage business, some merchant banking, and yet the revenue of a mid-size mithai shop in Diwali season. The twist? Promoters suddenly raised stake (up 51.3%) — like a father who ignored his kid all year but now proudly attends the annual day.
Is this stock genius or jugaad? Let’s audit.
3. Business Model (WTF Do They Even Do?)
LKP Finance is an NBFC + broking hybrid. On paper, they do everything from equities, derivatives, commodities, currency to debt placements. In reality, 90% of their revenue pie is interest income (53%) + fair value gains (45%). That’s corporate-speak for: We’re making money because markets are rising, not because we’re running a great business.
Their services:
Brokerage – Competing with Zerodha, Groww, Angel? LOL, they’re still in “Call & Trade” mode.
Debt Market Advisory – Merchant banking only for bonds. Basically, wedding planner for companies raising NCDs.
