Sammaan Capital: Don’t Be Fooled by the Results, Key Red Flags Explained

Synopsis: Shares of Sammaan Capital Ltd may look stable after Q3 results, but investors should be cautious. While revenue and profits held steady, a sharp collapse in net interest income highlights pressure on core lending spreads, raising concerns over earnings quality despite optically stable headline numbers.

The shares of this company, which is registered with and regulated by the National Housing Bank (NHB) and is engaged in the business of providing home loans and loans against property and also provides corporate mortgage loans, lease rental discounting and residential construction finance, had its shares in the news after reporting flat results but with a catch 

With the market cap of Rs 12,057  crore, the shares of Sammaan Capital Ltd have closed at Rs 146 and are trading at a PE of 9.46, whereas its industry PE is at 16.6. The shares have given a return of 15% over the last 6 months. 

Revenue from operations came in at Rs 2,158 crore in Q3 FY26, up 7% YoY compared to Rs 2,017 crore YoY and down 4% QoQ compared to Rs 2,251 crore, respectively. However, the profits tell a different story. Net profit grew to Rs 314 crore, a 4% YoY rise from Rs 302 crore and a 2% QoQ rise from Rs 308 crore.

Why do investors need to be careful?

For a finance company, Net Interest Income (NII) is the most reliable indicator of core business performance, as it captures the spread between interest income and interest expenses. During Q3 FY26, interest income was Rs 1,500.16 crore and finance costs were Rs 1,457.67 crore, leading to an NII of only Rs 42.49 crore. This is a drastic slide compared to Q3 FY25, when interest income of Rs 1,890.25 crore and finance costs of Rs 1,193.58 crore generated a much healthier NII of Rs 696.67 crore, indicating the strain on the core lending spread.

Not withstanding the fact that reported revenues are sustained by net gains on fair value changes and other non-interest income, these are not core finance business activities. Fair value gains are market-linked and highly fluctuating, and while they help sustain reported revenues in the short term, they do not indicate the sustainability or viability of the lending business.

Thus, even as the revenue headline figures look positive, the sharp YoY decline of nearly 94% in NII (Rs 696.67 crore to Rs 42.49 crore) is a clear indication of stress in the underlying business. In the case of finance companies, the key indicator of success and quality of earnings is the growth in NII, and not revenue.

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