Synopsis: Bajaj Holdings, Fino Payments Bank, 63 Moons Technologies, and MMTC reported significant contributions from other or exceptional income in Q3. In several cases, non-core income exceeded revenue from operations, while Bajaj Holdings’ profits were boosted by one-time gains. The trend raises concerns about the sustainability of earnings going forward.
Q3 earnings season has thrown up an interesting trend: headline profits that look strong on the surface but are heavily supported by other income and exceptional gains rather than core operations. Companies like Bajaj Holdings, Fino Payments Bank, 63 Moons Technologies, and MMTC reported significant contributions from non-operating sources, in some cases even exceeding revenue from operations. While such income can temporarily boost profitability, the sharp reliance on non-core streams raises questions about the durability and quality of earnings going ahead.
63 Moons Technologies Ltd
63 Moons Technologies Limited is a financial technology firm focused on building next-generation digital market infrastructure, platforms, and transaction systems across multiple industry segments. The company develops user-friendly financial marketplaces and technology solutions that enhance price discovery, efficiency, and global connectivity for Indian and international markets.
With a market cap of Rs 2,778 crore, the shares of 63 Moons Technologies Ltd have closed at Rs 603. The shares have given a return of more than 640% in the last 5 years.
Revenue from operations is Rs 26.64 crore, while other income is at Rs 40.92 crore, which is remarkably higher than revenue from operations itself. As a result, total income of Rs 67.78 crore is largely driven by non-core sources of income, such as treasury income, investments, or special gains. This is an indication that a major chunk of the reported profit does not come from core business activities, which may be a cause of concern if such income is not repeated in the future.
MMTC Ltd
MMTC, a public sector undertaking, was incorporated to facilitate foreign trade in India and canalise the export and import of essential minerals and metals and is under the administrative control of the Ministry of Commerce & Industry and the Government of India and is engaged in trading across minerals, metals, precious metals, agro products, fertilisers & chemicals and coal & hydrocarbons.
With a market cap of Rs 9,417 crore, the shares of MMTC Ltd have closed at Rs 62.78 and are trading at a PE of 83.1 compared to its industry PE of 31.8. The shares have given a return of about 55% in the last 5 years.
The financials reveal a disturbing trend where other income is Rs 34.18 crore, which is significantly higher than revenue from operations of Rs 0.34 crore, thus contributing almost entirely to the total income of Rs 34.52 crore. This is an indication that the company is earning very little revenue from its core business operations and is instead relying heavily on non-core or other sources of income. This dependence on other income is considered undesirable because it is not necessarily sustainable or recurring, thus raising concerns about the viability of the company’s core business model.
Fino Payments Bank Ltd
Financial Inclusion Network Operations (“FINO”) is a growing fintech company offering a diverse range of financial products and services that are primarily digital and have a payments focus. It offers such products and services to the target market via a Pan-India distribution network.
With a market cap of Rs 1,697 crore, the shares of Fino Payments Bank Ltd have closed at Rs 204 and are trading at a PE of 23.7 compared to its industry PE of 21. The company has 3 years of sales growth data of 76.3%.
From the financial information provided by the company, there is an obvious difference between the company’s core revenue and other income. The interest earned by the company, which represents its core operating revenue, is Rs 62.96 crores. On the other hand, the company’s “Other Income” is reported to be Rs 331.45 crores. This means that the company is earning more than five times its core revenue from other sources. Out of the total income of Rs 394.41 crores, the company is earning more from other income than its core business operations.
Bajaj Holdings & Investment Ltd
BHIL has been registered as a Non-Banking Financial Company registered with the Reserve Bank of India (RBI), and the company is classified as a ‘Systemically Important Non-deposit-taking NBFC’ as per RBI regulations.
With a market cap of Rs 1.24 lakh crore, the shares of Bajaj Holdings & Investment Ltd have closed at Rs 11,130 and are trading at a PE of 16.8 compared to its industry PE of 18.7. The shares have given a return of more than 200% in the last 5 years.
The profitability of the company witnessed a significant increase due to the exceptional item recognised during this quarter. The profit before the exceptional item and tax was at Rs 251.27 crores, which shows the profits earned during this period. However, with the addition of an exceptional item, which is mainly due to the profit earned on the sale of equity shares of Bajaj Finserv Limited, the profits rose to higher levels.
Also, the share of profits from associates was at Rs 1,832.79 crores, which made up for the profit before tax at Rs 2,084.06 crores. This shows that the significant rise in profits may not be due to regular business operations, and hence this may not be a sustainable rise for the company.
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