At a Glance
Mukesh Babu Financial Services Ltd (MBFSL) just posted its Q1 FY26 results, and the headline is… the company is still alive. Revenue came in at ₹3.85 Cr, down 33.7% YoY, while PAT recovered to ₹3.97 Cr from last quarter’s loss, but still nowhere near impressive. Margins look good on paper (77%), but when absolute numbers are this small, it’s like bragging about topping your class of three students. The stock trades at ₹129 with a P/E of 20—investors clearly value hope more than current reality. The dividend yield of 0.93% is nice, but not enough to save this sluggish NBFC from obscurity.
Introduction
Mukesh Babu Financial is that quiet NBFC nobody notices at the party—because it’s sitting in the corner nursing a tiny profit while Bajaj Finance dances on the table with 20% growth. Incorporated in 1985, this Mumbai-based firm does lending, investment banking, and corporate loans. Sounds fancy, but the scale is minuscule.
While giants like Shriram Finance and Muthoot rake in thousands of crores in PAT, MBFSL struggles to cross ₹4 Cr in a good quarter. The only silver lining? It trades at a mere 0.28x its book value, which is like buying a mansion for the price of a bicycle—if you ignore that the mansion is in a sinking neighborhood.
Business Model (WTF Do They Even Do?)
MBFSL is a Non-Systemically Important, Non-Deposit Taking NBFC (translation: small fry in the NBFC pond). Its activities include:
- Lending: Corporate loans, some retail lending.
- Investments: Proprietary investments in equities and other securities.
- Investment Banking: Advisory, though not a revenue driver.
- Research-based Investing: Sounds fancy, but results say otherwise.
The business is interest-spread driven. When you lend at higher rates than your borrowing cost, you win. Unfortunately, MBFSL’s scale, rising debtor days, and inconsistent income streams mean the wins are few.
Financials Overview
Q1 FY26 wasn’t terrible, but “not terrible” isn’t a benchmark investors love.
- Revenue: ₹3.85 Cr (down 33.7% YoY)
- Operating Profit: ₹2.99 Cr (OPM 77%)
- PAT: ₹3.97 Cr (vs -₹2.14 Cr last quarter)
- EPS: ₹4.23 (TTM EPS ₹5.23)
For FY25, revenue was just ₹7.17 Cr, with PAT a meager ₹0.52 Cr. This was a collapse from FY24’s ₹5.87 Cr PAT. ROE sits at a depressing 0.23%, and ROCE at 1.5%—numbers that would make even an auditor sigh.
Valuation
Despite weak fundamentals, let’s compute:
1. P/E Method
Industry P/E (NBFC mid-tier): ~15x
TTM EPS: ₹5.23
Fair Value = 15 × 5.23 = ₹78
2. P/B Method
Book Value: ₹453
P/B typically ~0.5x for struggling NBFCs
Fair Value = 0.5 × 453 = ₹226
3. DCF
Irrelevant due to erratic cash flows. Assuming minimal growth, intrinsic value ≈ ₹90
Fair Value Range: ₹78 – ₹226
(Current price ₹129 is somewhere in limbo—cheap on book, expensive on earnings.)
What’s Cooking – News, Triggers, Drama
- Q1 PAT bounced back but revenue fell sharply.
- Dividend record date: Sept 2, 2025 – interim dividend to keep shareholders calm.
- Reappointment of independent director Bhavesh Doshi – governance is at least stable.
- No big growth triggers; management remains silent on expansion plans.
Balance Sheet
| (₹ Cr) | Mar 2025 |
|---|---|
| Assets | 442 |
| Liabilities | 133 |
| Net Worth | 309 |
| Borrowings | 40 |
Auditor’s Quip: Assets are decent, borrowings are low, but returns are microscopic. It’s like owning a Ferrari and never leaving the garage.
Cash Flow – Sab Number Game Hai
| (₹ Cr) | FY23 | FY24 | FY25 |
|---|---|---|---|
| Ops CF | 5.94 | -3.49 | -6.42 |
| Investing CF | -8.47 | 0.43 | -0.54 |
| Financing CF | 3.43 | 2.63 | 6.79 |
Comment: Operating cash flow negative for two years straight—warning bells.
Ratios – Sexy or Stressy?
| Ratio | Value |
|---|---|
| ROE | 0.23% |
| ROCE | 1.5% |
| P/E | 20 |
| PAT Margin | 39% |
| D/E | 0.13 |
Verdict: Margins high only because revenue is tiny. ROE/ROCE embarrassingly low.
P&L Breakdown – Show Me the Money
| (₹ Cr) | FY23 | FY24 | FY25 |
|---|---|---|---|
| Revenue | 11.4 | 17.7 | 7.2 |
| EBITDA | 9.0 | 10.5 | 4.3 |
| PAT | 4.8 | 5.9 | 0.5 |
Auditor Roasts: FY25 was a disaster, Q1 FY26 looks like damage control. Don’t expect miracles.
Peer Comparison
| Company | Rev (₹ Cr) | PAT (₹ Cr) | P/E |
|---|---|---|---|
| Bajaj Finance | 73,107 | 17,425 | 31.5 |
| Muthoot Finance | 20,214 | 5,333 | 19.8 |
| Shriram Finance | 43,778 | 8,508 | 14.0 |
| Mukesh Babu Fin. | 5 | 4 | 20.0 |
Comment: Compared to peers, MBFSL is a microbe. Same P/E, but no growth story.
Miscellaneous – Shareholding, Promoters
- Promoters: 62.86% (stable)
- FIIs: 0% (not interested)
- Public: 37.1%
Promoter stake is strong, but nobody else seems to care. FIIs have left the chat.
EduInvesting Verdict™
Mukesh Babu Financial Services is a strange case—undervalued on book, overvalued on earnings. The company has survived decades but has failed to scale meaningfully. Its growth is nonexistent, returns negligible, and revenue unpredictable. Investors looking for multibaggers should look elsewhere; this is a stock for patient collectors of high book value, not high returns.
SWOT Analysis
- Strengths: Strong book value, low debt, promoter stability.
- Weaknesses: Low ROE/ROCE, negative cash flows, declining revenue.
- Opportunities: Could unlock value if it sells assets or reinvents lending strategy.
- Threats: Stagnation, regulatory tightening, market irrelevance.
Final Word: At ₹129, the stock is neither a screaming buy nor an obvious sell. It’s a value trap disguised as a bargain. Unless management wakes up, MBFSL will remain the quiet NBFC that no one notices.
Written by EduInvesting Team | 30 July 2025
SEO Tags: Mukesh Babu Financial, NBFC Stocks, Q1 FY26 Results, Value Trap
