🧠 At a Glance
A.K. Capital Services Ltd isn’t your friendly neighborhood NBFC—it’s one of India’s OG merchant bankers that helps companies raise debt. With a ₹750 Cr market cap, ₹481 Cr revenue, 71% promoter holding, and a P/E of just 8.9, the stock looks like it’s been chilling while the rest of the NBFC party danced. But with a booming debt market and ₹3,100 Cr borrowings, could this be the quiet compounding player in your financial services watchlist?
1. 🪪 Introduction – India’s Debt Dealer Nobody Talks About
When someone says “NBFC,” your brain probably jumps to names like Bajaj Finance, Cholamandalam, or Shriram Finance. But A.K. Capital Services? Sounds like a law firm your CA warned you about.
Except it’s not. This is one of India’s most low-key debt raising powerhouses, quietly managing private placements and public issues of NCDs, PTCs, and other fixed-income securities.
Think of it as SBI Capital Markets Lite, but publicly listed. 🧠
2. 🏢 Business Model – WTF Do They Even Do?
A.K. Capital Services Ltd is a SEBI-registered Category I Merchant Banker, which means:
- 📢 They structure and sell bonds (NCDs, MLDs, PTCs) for clients
- 💼 They act as lead managers for public debt issues
- 📈 Also into portfolio management and advisory
- 🏦 And via its subsidiaries, also does NBFC lending and trusteeship
In short: If your company wants to raise debt, they’ll help you issue it, manage it, and even lend you some themselves.
They’re not flashy, but they’re vital cogs in the capital market machine.
3. 💸 Financials Overview – Profits, Margins, Growth
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| Revenue | ₹252 Cr | ₹314 Cr | ₹481 Cr |
| Net Profit | ₹62 Cr | ₹64 Cr | ₹87 Cr |
| OPM | 74% | 76% | 71% |
| EPS | ₹93.9 | ₹96.5 | ₹128.4 |
| ROE | 9% | 9% | 10% |
🔥 Despite operating in a niche segment, their OPM is consistently 70%+. That’s unheard of in NBFC land.
But revenue growth is finally spiking in FY25 (up 53% YoY), hinting at increased placement activity in the debt market.
4. 📊 Valuation – Cheap, Reasonable, or Delusional?
Let’s break this down:
- Market Cap: ₹750 Cr
- TTM PAT: ₹87 Cr
- P/E Ratio: ~8.6x
- Book Value: ₹1,470
- P/B Ratio: 0.77x
- Dividend Yield: 2.11%
🧮 Fair Value Estimate:
Let’s assume a conservative forward PAT growth of 10% over FY25-27, and value it at 10x-12x FY27E EPS (~₹140):
FV Range = ₹1,400 – ₹1,680
👀 Stock CMP = ₹1,137 → Trading 20%–32% below FV range
This looks like a classic “discount to book + low P/E” combo, but the business is cyclical and not very scalable.
5. 🔥 What’s Cooking – News, Triggers, Drama?
- ✅ Declared 140% final dividend for FY25
- 🔁 Re-appointed A.K. Mittal as MD for 5 more years (continuity of leadership)
- 📈 Sales in FY25 saw a YoY jump of 53%
- 📉 Q4FY25 PAT dipped slightly to ₹27 Cr, down from ₹30 Cr in Q3 – nothing alarming
- 📦 Subsidiary NBFC also contributes to consolidated revenue growth
No hot goss, no SEBI raids, no pump-n-dump Telegram groups. This one’s boring—but in a good way.
6. 🧾 Balance Sheet – How Much Debt, How Many Dreams?
- Total Borrowings: ₹3,148 Cr
- Total Assets: ₹4,240 Cr
- Equity + Reserves: ₹971 Cr
- Debt-to-Equity: 3.2x 😬
While this is expected for an NBFC, it shows they operate heavily on leverage—the game is all about spreads and risk control.
They’re not lending to consumer durables or farmers. It’s institutional-grade debt work.
7. 💵 Cash Flow – Sab Number Game Hai
- FY25 CFO: -₹478 Cr
- FY25 CFI: +₹163 Cr
- FY25 CFF: +₹319 Cr
- Net Cash Flow: Just ₹4 Cr (positive, but razor-thin)
Negative operating cash flows reflect working capital squeeze due to longer debtor cycles and large NBFC book buildup.
That said, they’ve always walked this tightrope.
8. 📐 Ratios – Sexy or Stressy?
| Metric | FY25 |
|---|---|
| ROE | 10.09% |
| ROCE | 9.59% |
| OPM | 71% |
| Interest Coverage | 1.48x (low) |
| P/BV | 0.77x |
They’re capital efficient by margin—but interest burden is creeping up, which limits ROE even with high profits.
9. 📈 P&L Breakdown – Show Me the Money
- 5-Year Revenue CAGR: 9%
- 5-Year Profit CAGR: 11%
- FY25 EPS: ₹128.38
- Dividend Payout: 30% (₹42/share)
💰 FY25 PAT of ₹87 Cr on ₹481 Cr revenue = 18% net margin — impressive for a company with ₹3,000+ Cr of debt.
10. 🥊 Peer Comparison – Bajaj Finance Se Kyun Nahi Darna?
| Company | P/E | P/B | ROE | Div Yld |
|---|---|---|---|---|
| A.K. Capital | 8.9x | 0.77x | 10.1% | 2.11% |
| Bajaj Finance | 35x | 6.04x | 19.2% | 0.47% |
| Cholamandalam | 30.8x | 5.55x | 19.7% | 0.13% |
| Shriram Finance | 15.6x | 2.27x | 15.6% | 1.45% |
They aren’t trying to be like Bajaj or Chola. A.K. is more of a pure-play fixed income investment bank + NBFC hybrid.
11. 📌 Miscellaneous – Promoters, Shareholding, Structure
- Promoter Holding: 71.5% (Steady since forever)
- DIIs: Now own 2.1% (Up from 0%—📈 sign of interest)
- Public: 26.39%
- No. of Shareholders: 2,575
- Director: Mr. A.K. Mittal (recently reappointed)
Still very much a family-run show.
12. 🧑⚖️ EduInvesting Verdict™
💬 “If this stock were a person, it’d be that guy in your colony who doesn’t talk much, drives a basic Swift, but owns three flats and 50 sovereign bonds.”
🟢 Positives:
- Ultra-low valuation (8.9x P/E, 0.77x P/B)
- 71% promoter stake
- 70%+ OPM with high dividend yield
🔴 Negatives:
- Low visibility in the NBFC space
- Limited scale due to niche model
- High debt + interest coverage under pressure
🎯 Fair Value Range: ₹1,400 – ₹1,680
At CMP ₹1,137, the stock is trading at a ~32% discount to lower end of fair value.
Not a multibagger rocketship, but a quiet compounder with bonds instead of buzzwords.
✍️ Written by Prashant | 📅 July 9, 2025
Tags: A.K. Capital Services, Merchant Banker, Debt NBFC, Fixed Income, EduInvesting, Smallcap NBFC, Dividend Stocks, Low PE, Value Investing, Financial Services India
