Smart Money Floods Geojit Stock Amidst Profit Plunge
Overview
Geojit Financial Services reported a 60% drop in quarterly net profit, yet large investors like Porinju Veliyath and Domestic Institutional Investors (DIIs) are aggressively buying. The stock, trading at a deep discount to peers, is seen by smart money as a turnaround opportunity fueled by digital investments.
Stocks Mentioned
Geojit Financial Services Sees Smart Money Influx Despite Profit Decline
Geojit Financial Services' net profit for the quarter ending September 2025 plummeted by nearly 60% to ₹22.4 crore. This downturn has seen its stock price drift significantly from its 52-week highs, prompting many retail investors to exit the market.
However, exchange filings for the December 2025 quarter reveal a contrasting trend: while the broader market sells, significant "smart money" is accumulating shares. This divergence signals that institutional investors see value despite the recent earnings shock.
Financials and Growth Trajectory
The company has demonstrated robust growth over the past five fiscal years. Sales compounded at 20% from FY20 to FY25, reaching ₹749 crore. EBITDA saw a 23% compound growth, rising to ₹285 crore in FY25. Profits grew at a 27% CAGR from FY20 to FY25, totaling ₹172 crore. For the first half of FY26, sales stood at ₹323 crore and profits at ₹52 crore.
The recent profit dip to ₹23 crore in Q2 FY26 was attributed by Managing Director C.J. George to planned increases in expenses. These include hiring more sales personnel, expanding the office network, and investing in IT infrastructure and technology teams. George anticipates these investments will yield results by the end of the current fiscal year.
Institutional Buying Surge
The most striking development is the aggressive entry of Domestic Institutional Investors (DIIs). Their holding in Geojit surged from a negligible 0.83% in September 2025 to 10.13% by December 2025 – an increase of over 1,100% in a single quarter. Key institutional buyers include Bajaj Life Insurance, which acquired a 4.84% stake, and ICICI Prudential Life Insurance, which purchased 4.48%.
Value Investing Bets
Porinju Veliyath, founder of Equity Intelligence India, known for his value hunting strategy, has also entered the fray. Veliyath acquired 40 lakh shares at an average price of ₹68, securing a 1.43% stake worth over ₹27 crore. As of January 13, 2026, this position holds an approximate paper profit of ₹2 crore.
Rekha Jhunjhunwala, a prominent long-term shareholder, continues to hold her 7.2% stake, signaling confidence in the company's management and franchise strength. The Jhunjhunwala family's association with Geojit dates back to 2005.
Valuation Discrepancy and Business Evolution
Geojit Financial Services is trading at a Price-to-Book (P/B) ratio of just 1.7x, representing a discount of nearly 63% compared to its peer Angel One, which trades at approximately 4.6x P/B. Investors are betting on a mean reversion, anticipating significant capital appreciation if this valuation gap narrows.
Historically, Geojit has also offered a healthy dividend yield of around 2%. The company's Assets Under Custody and Management (AUM) exceeded ₹100,065 crore as of March 2025. Despite a market capitalization of only ₹2,036 crore, the market appears to undervalue its wealth management franchise.
Navigating Headwinds
The company is investing heavily in digital platforms, such as the "Flip" app for traders and "FundsGenie" for mutual fund investors, to compete with tech-focused rivals like Zerodha and Angel One. These expenditures are currently suppressing margins and contributing to an optically high P/E ratio. The sector also faces regulatory headwinds from tighter SEBI norms on Futures & Options trading and a crackdown on "finfluencers," which could affect trading volumes.
The aggressive accumulation by institutional investors suggests they view these challenges as temporary. Geojit Financial Services presents a contrarian opportunity for patient investors willing to wait for its digital strategy to mature.
