At a Glance
Nexome Capital Markets (formerly SMIFS Capital) – a company that survives on advisory fees, bond trades, and divine patience – reported a Q1 FY26 net profit of ₹1.27 crore, up almost 95% QoQ. EPS? ₹2.16 – just enough to buy a chai in Mumbai. P/E sits at 32, not insane but still pricey given the pathetic ROE of 0.69%. Stock trades at 0.43x book value, which makes it look cheap, but investors know why – returns move slower than Mumbai traffic. Oh, and they’re opening a Mumbai branch in September, so maybe they’ll earn more fees to cover office chai expenses.
Introduction
Merchant bankers are supposed to be the slick Wall Street-types of India. Nexome? More like the accountant who shows up late to the IPO party. The company deals in corporate finance, underwriting, open offers, and advisory services – basically, anything where they can charge a fee without sweating.
Despite the business model sounding fancy, revenue has been inconsistent, profits tiny, and cash flow sketchy. Yet, the stock doubled in a year (+113% CAGR). Why? Because the market loves underdogs… or maybe just speculators.
Business Model (WTF Do They Even Do?)
Nexome Capital is a SEBI-registered Category-I Merchant Banker. They manage IPOs, open offers, buybacks, and corporate restructuring deals. Add a side hustle of trading government securities and equities, and you have a cocktail of low-margin businesses. Unlike full-service brokers, they don’t thrive on volumes – they survive on transaction-based income and advisory retainers.
Translation? They make money only when deals happen. Slow deal flow = slow revenue. It’s a feast or famine kind of business.
Financials Overview
For Q1 FY26:
- Revenue: ₹16.7 crore (+5.6% QoQ)
- Net Profit: ₹1.27 crore (+95% QoQ, because last quarter was abysmal)
- EPS: ₹2.16 (annualized ~₹8.6)
- P/E: Freshly at 32x.
For FY25:
- Revenue: ₹43.46 crore
- PAT: ₹1.17 crore
- Margins: Barely 5.3%.
Commentary: Revenue bounces like a penny stock. Profits? Better than last year but still tiny.
Valuation
1. P/E Method
EPS ₹3.57 (TTM) × industry P/E (20) = ₹71/share
2. EV/EBITDA
EBITDA ~₹2.3 crore × multiple 8 = ₹18.4 crore ÷ shares → ~₹31/share
3. Book Value
BV ₹262 × 0.5 P/B = ₹131/share
🎯 Fair Value Range: ₹30 – ₹130 (wide because earnings are unpredictable).
What’s Cooking – News, Triggers, Drama
- Rights Issue approved, which means dilution but also fresh capital.
- New Mumbai Branch opening on Sept 1, 2025 – a growth move (or just higher rent?).
- Preferential Issue ₹14.16 crore already raised.
- Any big IPO or advisory mandate can swing earnings big time.
Balance Sheet
| Assets | ₹162.6 Cr |
|---|---|
| Liabilities | ₹5.8 Cr |
| Net Worth | ₹147.9 Cr |
| Borrowings | ₹3.0 Cr |
Auditor Roast: “Almost debt-free, but assets are mostly investments. Balance sheet stable, like a parked car.”
Cash Flow – Sab Number Game Hai
| Year | Ops | Investing | Financing |
|---|---|---|---|
| FY23 | -₹7 Cr | ₹2.6 Cr | -₹0.04 Cr |
| FY24 | -₹4.9 Cr | ₹6.3 Cr | ₹0.08 Cr |
| FY25 | -₹6.2 Cr | -₹2.5 Cr | ₹7.8 Cr |
Commentary: Cash from ops negative for years. They’re burning cash to survive and relying on financing moves.
Ratios – Sexy or Stressy?
| Ratio | Value |
|---|---|
| ROE | 0.69% |
| ROCE | 1.24% |
| P/E | 32 |
| PAT Margin | 5.3% |
| D/E | 0.02 |
Roast: “ROE lower than FD rates, but at least they’re not drowning in debt.”
P&L Breakdown – Show Me the Money
| Year | Revenue | EBITDA | PAT |
|---|---|---|---|
| FY23 | ₹57.3 Cr | ₹0.8 Cr | ₹0.5 Cr |
| FY24 | ₹43.5 Cr | ₹2.3 Cr | ₹1.17 Cr |
| FY25 | ₹40.3 Cr | ₹0.15 Cr | ₹2.08 Cr |
Commentary: Erratic performance – no clear growth trend.
Peer Comparison
| Company | Rev (₹Cr) | PAT (₹Cr) | P/E |
|---|---|---|---|
| CRISIL | 3,381 | 728 | 53 |
| Wealth First | 52 | 35 | 37 |
| Dhani Services | 373 | 21 | 175 |
| Nexome Cap | 40 | 2 | 32 |
Commentary: Compared to CRISIL, this is peanuts. But at least it’s profitable.
Miscellaneous – Shareholding, Promoters
- Promoter holding: 52.1% (increased over time)
- FIIs: 0% (they bailed out)
- Public: 47.9%
Promoters seem committed (or trapped). FII exit signals lack of interest.
EduInvesting Verdict™
Nexome Capital Markets is like that startup friend who’s always on the verge of “big deals” but never quite makes it to the unicorn stage. The company has cleaned up its balance sheet, but profitability remains microscopic.
SWOT Quickie
- Strengths: SEBI Merchant Banker license, low debt, advisory expertise.
- Weaknesses: Low ROE, weak cash flows, volatile earnings.
- Opportunities: Rights issue + new branch could trigger growth.
- Threats: Regulatory risk, deal pipeline drying up.
Final Word: If you’re betting on a turnaround play, Nexome is a dark horse. If you like steady returns, stick to CRISIL.
Written by EduInvesting Team | 31 July 2025SEO Tags: Nexome Capital Markets, Merchant Banking, Financial Analysis
