Dharani Finance Limited

Financial Services — Credit Services · BSE

₹10.59+₹0.01 (+0.09%)

DalalBaazaar Score

71 / 100

🟢 Good

Verdict

NEUTRAL

Risk

High

Driven by short-term liabilities exceed short-term assets, negative free cash flow, micro-cap size, which brings thin liquidity.

In simple words: The business is earning a fairly low return on the money invested in it, with both sales and profits growing well. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:46 pm

Understanding the Business

Company site ↗

The 60-second version of Dharani Finance Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Dharani Finance Limited provides non-banking financial services in India.

IndustryCredit Services

SectorFinancial Services

Employees3

Annual revenue₹1 Cr

How does it make money?

Turns over ₹1 Cr a year. Of every ₹100 of sales, about ₹42 reaches shareholders as profit, with ₹65 left at the operating level before interest, tax and depreciation. Each of its 3 employees supports ₹43.5 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹43.5 lakh

Who are its competitors?

The closest listed comparisons in its industry are BAJAJ FINANCE LIMITED, STATE BANK OF INDIA, HDFC BANK LTD, ICICI BANK LTD.. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?Not assessable from these ratios

For a lender, returns on capital are shaped by leverage and funding cost rather than by pricing power, so the usual financial signature of an advantage does not apply. Judge this one on deposit franchise, cost of funds and asset quality — none of which are in this data.

Peer median ROE16.5%

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved +161% while net margin moved -268% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+161%

Margin effect-268%

DalalBaazaar Score

71/ 100

Good

Weighted across six categories. Every point is explained below.

✓ Beta of 0.32 — historically steadier than the index
✗ Micro Cap: thinner liquidity and sharper drawdowns are normal
✗ Profits have swung sharply from year to year — earnings are hard to forecast
✗ Negative free cash flow means dependence on external funding

Quality vs. Valuation

Company Quality

77/ 100

Good

How good the business is, ignoring the share price entirely.

Valuation

72/ 100

Cheap

What you are being asked to pay, ignoring how good the business is.

A good business currently available at an undemanding price — the combination this framework is built to look for.

Historical Valuation

Current P/E

8.9x

1.3Y Median

7.1x

16 monthly readings · mean 7.8x · range 5.2x–11.9x

Sector Median

17.0x

median of 4 sector peers

⚠️Current valuation is approximately 26% above its 1.3y median of 7.1x. Paying more than usual needs a reason — faster growth, a better balance sheet, or a re-rating you believe in.

🟢Against its sector it trades 48% below the peer median of 17.0x.

vs. its own history

Expensive

7.1x median over 16 months · +26%

vs. sector peers

Cheap

17.0x median of 4 peers · -48%

vs. generic bands

Cheap

Below 15x

EV/EBITDA

6.7x

PEG

0.37

What's Good / What's Bad

🟢 What's Going Well2

Return on equity is rising
ROE has improved from -1.6% to 5.5%.
Return on capital is rising
ROCE has improved from 0.6% to 7.4%.

🔴 What Needs Attention1

Short-term liquidity is tight
Current ratio of 0.96 — near-term obligations exceed near-term assets.

Red Flags

1 item require attention · 1 high

🔴Significant margin compressionFinancial
EBITDA margin has fallen 15.2 points, from 80.3% to 65.1%.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Cheaper than its peers
It trades 48% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.

🔴 Bear CaseWhat could go wrong?

Margins are being competed away
EBITDA margin has fallen from 80.3% to 65.1%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
The price already assumes success
The stock trades 26% above its own median multiple. At this level the business has to deliver just to stand still, and a stumble is repriced twice — lower earnings on a lower multiple.
Earnings are hard to forecast
Profit has swung sharply from year to year, so any single year — good or bad — is a weak guide to the next. Cyclical earnings deserve lower multiples for that reason.
Size brings its own risk
Micro Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 28% a year✓ 37.6% CAGR
Latest reported year was 16.8%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 63%✓ 65.1%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Return on equity stays above 8%✗ 5.5%
For a lender this is the cleanest single read on whether the book is being grown profitably.
4Valuation vs its own median of 7.1x✗ 8.9x today
A re-rating above its own history needs a reason; without one it is just a higher price.

Investment Checklist

5 / 11 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✗ Strong return on capital employed (ROCE ≥ 15%)
✓ Healthy net margin (≥ 10%)
✗ Generates positive free cash flow
✗ Manageable leverage (Debt/Equity < 1.0)
✗ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

5 good · 2 neutral · 4 weak

Market Cap

₹5 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

8.9x

Cheap

Cheap against the generic band

P/B Ratio

0.54x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹1.19

Profitable

Profitable on a per-share basis

ROE

5.5%

Weak

Weak capital efficiency

ROCE

7.4%

Weak

Low return on total capital employed

Debt/Equity

6.28x

High

High leverage

Revenue Growth (YoY)

16.8%

Healthy

Healthy top-line growth

Profit Growth (YoY)

24.2%

Healthy

Profits growing at a healthy clip

Dividend Yield

None

No dividend yield reported — usually means no payout, but verify if one was recently initiated

Free Cash Flow

-₹0 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

Operating Margin

63.6%

Good

Healthy core-business profitability

Net Margin

40.7%

Good

Strong bottom-line conversion

Current Ratio

0.96

Adequate

Adequate, but no real cushion

Beta (vs Nifty)

0.32

Defensive

Steadier than the market

52W Range Position

26%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

11.8 / 12.4

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

9.0

Oversold zone

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹1 Cr	₹0 Cr	₹1 Cr	₹1 Cr	+37.6%
EBITDA	₹0 Cr	₹0 Cr	₹1 Cr	₹1 Cr	+28.3%
EBITDA Margin	80.3%	66.2%	63.7%	65.1%	—
PAT (Net Profit)	-₹0 Cr	-₹0 Cr	₹1 Cr	₹1 Cr	—
EPS	₹-0.25	₹-0.61	₹1.68	₹1.11	—
ROE	-1.6%	-3.5%	8.8%	5.5%	—
ROCE	0.6%	-1.4%	8.1%	7.4%	—
Total Debt	₹0 Cr	₹0 Cr	₹0 Cr	₹1 Cr	+44.3%
Free Cash Flow	-₹0 Cr	-₹0 Cr	₹0 Cr	-₹0 Cr	—

🟢 Revenue has grown at 37.6% a year over 3 years.

🟢 EBITDA has grown at 28.3% a year over 3 years.

🔴 EBITDA Margin has fallen from 80.3% to 65.1% over 3 years (-15.2 pts).

🟢 PAT (Net Profit) has turned positive, from -₹0 Cr to ₹1 Cr.

🟢 EPS has turned positive, from ₹-0.25 to ₹1.11.

🟢 ROE has risen from -1.6% to 5.5% over 3 years (+7.1 pts).

🟢 ROCE has risen from 0.6% to 7.4% over 3 years (+6.8 pts).

🔴 Total Debt has grown at 44.3% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹11 Cr

Total Liabilities

₹1 Cr

Cash & Equivalents

₹0 Cr

Operating Cash Flow

₹0 Cr

Capex

-₹1 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

50.7%

Corporate Actions

Ex-Dividend Date

06 Sept 2012

Peer Comparison

Company	P/E	ROE
BAJAJ FINANCE LIMITED	30.2x	17.8%
STATE BANK OF INDIA	10.3x	15.2%
HDFC BANK LTD	15.9x	13.8%
ICICI BANK LTD.	18.1x	16.5%

Recent News

1 mixed5 general

Dharani Finance Ltd. Peer Comparison – Compare with Others

Value Research, 28 Aug

Compare DHARANI FIN. with PARAGON FIN.

Equitymaster, 15 Oct

Dharani Finance shareholders approve all resolutions at 36th AGM

scanx.trade, 23 Sept

Dharani Finance (BSE: 511451): Capital Markets and Broking Classification Explained

Kalkine India, 16 Sept

Dharani Finance Q1 FY27 Results: Revenue Rs 0.42 Cr, PAT Rs 0.20 Cr and Key Highlights

Univest, 11 AugResults

🟡Mixed / dependsA results event. The figures on this page update once the new statements reach the data feed, which usually lags the announcement.

Dharani Finance Standalone June 2026 Net Sales at Rs 0.42 crore, up 16.75% Y-o-Y

Moneycontrol.com, 11 Aug

Watch Items

This is a financial-sector business: borrowing is its raw material, not leverage in the usual sense. Debt/Equity and ROCE here aren't comparable to a manufacturer's — read them alongside NIM, GNPA and capital adequacy from the company's own disclosures.
Cross-check against the company's latest quarterly filing / investor presentation before acting.
RSI is in oversold territory — could mean either a bargain or a stock still falling for good reason. Check the 'why' before assuming reversal.

DalalBaazaar Thesis

StrongBusiness Quality · Financial Health · Growth · Profitability · Valuation

WeakRisk

Points for each in the Score ↑

Attractive on both counts

A good business currently available at an undemanding price — the combination this framework exists to look for. The work left is qualitative: whether the advantage the numbers imply is one you can identify and expect to last. 1 high-severity red flag sits above this conclusion and should be read first.

2 of 4 tripwires tripped — Return on equity stays above 8%; Valuation vs its own median of 7.1x · see Key things to watch ↑