At a Glance
Nahar Capital & Financial Services Ltd just reported Q1 FY26 net profit of ₹11.48 crore on revenue of ₹5.67 crore. EPS came in at ₹6.86, ROE at 3.21%, and ROCE at a modest 3.78%. The company is debt-free, trades at a scandalously low 0.33× book value (₹934), and sits on investments worth more than its market cap. Yet, the market yawns at ₹304/share. Why? Because this is a classic value trap: assets rich, returns poor, and promoters seemingly in hibernation.
Introduction
Nahar Capital is like that old Marwari uncle with gold biscuits under the mattress—asset-heavy but sleepy when it comes to generating returns. Established in 2006, it’s an NBFC that invests in shares, bonds, and real estate, while also dabbling in lending against securities. Sounds exciting? Not really.
The company’s core earnings rely on market-linked investment returns (hello volatility!) and occasional real estate activity. Operating income is negligible; other income (₹52.6 Cr in FY25) is the real hero. ROE barely scrapes past 3%, making this a stock where the balance sheet looks like Ambani, but the P&L looks like a kirana store.
Business Model (WTF Do They Even Do?)
- Investment Arm: Long-term investments in equities and bonds, with occasional short-term trading.
- Real Estate: Buys, sells, and leases properties—more trading than development.
- Lending: Provides secured loans against shares, bonds, and property.
The business model is asset-heavy and interest-light—returns depend on market moves, not operational excellence. That’s why earnings swing like a drunk pendulum.
Financials Overview
Q1 FY26 Highlights (₹ Cr):
- Revenue: 5.67 (down 13.8% YoY)
- EBITDA: 3
- PAT: 11.48 (flat YoY)
- EPS: ₹6.86
Annualized EPS = ₹6.86 × 4 = ₹27.4
Fresh P/E = ₹304 / ₹27.4 ≈ 11.1 (cheap but not compelling given low ROE).
The real kicker? Book value is ₹934. Stock trades at just 0.33× BV, but investors don’t pay for assets that don’t sweat.
Valuation
Fair Value via three lenses:
- P/E Method: Apply a fair P/E 10 × EPS ₹27.4 = ₹274
- P/B Method: Apply 0.5× BV ₹934 = ₹467
- Sum-of-Parts: Value investments at ₹1,500 Cr less holding discount → FV ₹400
Fair Value Range: ₹270–₹400
Current price ₹304 sits near the lower end, reflecting market skepticism.
What’s Cooking – News, Triggers, Drama
- Dividend ₹1.50/share → Record date Sept 5, 2025.
- ICRA reaffirmed highest safety rating (A1+) for ₹25 Cr CP → credit profile solid.
- Low Dividend Payout → Only 9.6% of profits distributed—investors get crumbs while promoters feast on NAV.
- No Big Catalysts → Unless management decides to unlock value, stock stays in limbo.
Balance Sheet
| (₹ Cr) | Mar 2025 |
|---|---|
| Assets | 1,726 |
| Liabilities | 157 |
| Net Worth | 1,569 |
| Borrowings | 5 |
Auditor Punchline: “Balance sheet screams wealth. Income statement whispers poverty.”
Cash Flow – Sab Number Game Hai
| (₹ Cr) | Mar 2023 | Mar 2024 | Mar 2025 |
|---|---|---|---|
| Ops | -69 | -11 | -0 |
| Investing | 75 | 12 | 3 |
| Financing | -5 | -3 | -3 |
Commentary: Operating cash flow is negative, as earnings are mostly book gains, not cash profits.
Ratios – Sexy or Stressy?
| Metric | Value |
|---|---|
| ROE | 3.21% |
| ROCE | 3.78% |
| P/E | 11.1 (fresh) |
| PAT Margin | 54% (driven by other income) |
| D/E | 0.0 |
Verdict: “Sexy? Only if you love NAV discounts. Stressy? If you like returns.”
P&L Breakdown – Show Me the Money
| (₹ Cr) | Mar 2023 | Mar 2024 | Mar 2025 |
|---|---|---|---|
| Revenue | 52 | 26 | 25 |
| EBITDA | 16 | 17 | 14 |
| PAT | 107 | 12 | 50 |
Commentary: FY24 profit crashed due to poor investment performance. FY25 rebounded but nowhere near 2022 highs.
Peer Comparison
| Company | Rev (₹ Cr) | PAT (₹ Cr) | P/E |
|---|---|---|---|
| Tata Inv. Corp. | 304 | 312 | 110 |
| Mah. Scooters | 205 | 194 | 95 |
| JSW Holdings | 248 | 196 | 112 |
| Nahar Cap | 25 | 50 | 11 |
Roast: “Peers trade at obscene P/E despite low ROE, but they have brand clout. Nahar? Unknown and unloved.”
Miscellaneous – Shareholding, Promoters
- Promoter Holding: 71.95% (stable, control freaks)
- FII Holding: 0.32% (negligible)
- Public Holding: 27.4% (trapped)
No stake sales, no buybacks, no excitement.
EduInvesting Verdict™
Nahar Capital is a paradox: dirt-cheap valuation, fat assets, and zero debt—yet the market doesn’t care. Why? Because returns are anaemic, dividend stingy, and management passive. Unless they monetize assets or increase payouts, this stock remains a NAV-discount zombie.
SWOT:
- Strength: Debt-free, undervalued assets.
- Weakness: Low ROE, poor cash generation.
- Opportunity: NAV unlock, higher dividend, strategic stake sale.
- Threat: Continued value trap, market apathy.
Final Thought:
At ₹304, the downside is limited, but the upside requires a trigger. Without corporate action, Nahar remains the stock equivalent of a sleeping lion—majestic, but just lying there.
Written by EduInvesting Team | 31 July 2025
SEO Tags: Nahar Capital, NBFC, Investment Company, Q1 FY26, NAV Discount
