At a Glance
Asit C. Mehta Financial Services Ltd (ACMFSL) has had a quarter straight out of a financial horror flick. Stock trades at ₹152, market cap ₹125 crore, and the company just announced a ₹50 crore rights issue to stop the bleeding. Q1 FY26 saw a loss of ₹2.4 crore, despite revenues spiking to ₹29.5 crore (thanks to other income magic last year). With ROE at -10%, interest burden high, and operating margins behaving like a yo-yo, this is one for the adrenaline junkies.
Introduction
Once known for its advisory chops, ACMFSL now rents out office space and dabbles in corporate finance consulting. Basically, it’s trying to be a broker, landlord, and consultant all at once – a jack of all trades, master of none.
The company’s track record is messier than a toddler’s drawing. Profits? Rare. Losses? Frequent. Debt? Growing. Yet, here we are – stock at ₹152 and management planning to dilute equity further. Investors are holding their breath, but not sure if it’s excitement or impending doom.
Business Model (WTF Do They Even Do?)
- Advisory Services: Corporate finance restructuring and fund-raising.
- Financial Products: Distribution of investment products to retail and SMEs.
- Real Estate: Leasing out fully furnished office spaces at Nucleus House, Mumbai.
On paper, it’s a mix of stable rental income and high-margin advisory. In reality, volatility is the only constant. The business model relies heavily on market cycles, interest rates, and management execution, all of which have been wobbly lately.
Financials Overview
Q1 FY26 Highlights:
- Revenue: ₹29.5 crore (up 92% YoY)
- Operating Profit: ₹4.5 crore (OPM 15%)
- Net Profit: ₹2 crore (positive this quarter, but still a yo-yo across quarters)
- EPS: ₹2.24
FY25 Snapshot:
- Revenue: ₹72.6 crore
- PAT: ₹-2.7 crore
- EPS: ₹-3.35
- ROE: -10.1%
Operating profit turned positive after multiple loss-making quarters, but debt and interest expenses continue to eat into gains.
Valuation
- Book Value: ₹31
- P/B: 4.9x (expensive for a loss-maker)
- EPS (TTM): Negative → P/E not meaningful
Fair Value Estimate:
- P/B Method: For a company with -ROE, fair P/B = 2–3 → Price should be ₹60–₹90.
- EV/EBITDA: EBITDA barely positive, so valuation shaky.
- DCF: Not happening until consistent cash flows appear.
Fair Value Range: ₹60–₹90 (Current price ₹152 = premium fantasy)
What’s Cooking – News, Triggers, Drama
- Rights Issue ₹50 Cr: Dilution incoming. Funds likely for debt reduction & working capital.
- Debt Overhang: Borrowings ₹118 crore vs equity ₹8.25 crore – leverage high.
- Advisory Growth? Needs new mandates to turn around.
- Trigger: If rights issue successfully closes and interest costs drop, profitability may return.
Balance Sheet
| (₹ Cr) | Mar 2025 |
|---|---|
| Assets | 198 |
| Liabilities | 181 |
| Net Worth | 25.5 |
| Borrowings | 118 |
Commentary: Highly leveraged. Net worth eroded by losses. Rights issue is a band-aid on a deep cut.
Cash Flow – Sab Number Game Hai
| (₹ Cr) | 2023 | 2024 | 2025 |
|---|---|---|---|
| Ops | -5.7 | -0.4 | -6.4 |
| Investing | 3.6 | -12.1 | -0.4 |
| Financing | 1.1 | 10.8 | 14.7 |
Observation: Operating cash flows negative for years. Survival is debt-driven.
Ratios – Sexy or Stressy?
| Metric | Value |
|---|---|
| ROE | -10.1% |
| ROCE | 5.4% |
| D/E | 4.6 |
| OPM | 5.7% |
| P/B | 4.9 |
Verdict: Ratios scream stress. Leverage is the red flag.
P&L Breakdown – Show Me the Money
| (₹ Cr) | 2023 | 2024 | 2025 |
|---|---|---|---|
| Revenue | 33.7 | 46.3 | 72.6 |
| EBITDA | 1.3 | 0.8 | 4.1 |
| PAT | -9.3 | -11.1 | -2.7 |
Commentary: Revenue growth strong, profits missing. Margins remain unpredictable.
Peer Comparison
| Company | Revenue (₹ Cr) | PAT (₹ Cr) | P/E |
|---|---|---|---|
| Motilal Oswal | 8758 | 2783 | 19.6 |
| Angel One | 4973 | 994 | 23.5 |
| IIFL Capital | 2382 | 705 | 14.0 |
| ACMFSL | 72 | -2.7 | N/A |
Roast: Peers mint money. ACMFSL is still figuring out where the profits are hiding.
Miscellaneous – Shareholding, Promoters
- Promoters: 75% (stable)
- Public: 25% (bag-holders?)
- Rights Issue: Likely to be fully subscribed by promoters to maintain control.
EduInvesting Verdict™
ACMFSL is walking on a financial tightrope. The rights issue is a desperate attempt to plug the holes. While revenue growth is encouraging, high leverage and inconsistent profitability make it a risky bet.
SWOT
- Strengths: Established brand, revenue growth, promoter backing.
- Weaknesses: High debt, negative ROE, inconsistent profits.
- Opportunities: Rights issue could stabilize finances, advisory mandates could boost earnings.
- Threats: Rising interest costs, dilution, competition from bigger brokers.
Final Word: At ₹152, the market is pricing in a turnaround that hasn’t arrived yet. Wait for post-rights issue clarity before making any moves. Right now, it’s more of a speculative play than an investment.
Written by EduInvesting Team | 31 July 2025SEO Tags: Asit C Mehta Financial Services, Rights Issue, Financial Advisory, Stock Analysis
