Paragon Finance Limited

Financial Services — Credit Services · BSE

₹52.40−₹0.09 (−0.17%)

DalalBaazaar Score

51 / 100

🟡 Moderate

Verdict

CAUTION

Risk

Moderate

Driven by 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, 7:03 pm

Understanding the Business

Company site ↗

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

What does this company do?

Paragon Finance Limited, a non-banking financial company, engages in loans against hypothecation of vehicles in India.

IndustryCredit Services

SectorFinancial Services

Employees6

Annual revenue₹1 Cr

How does it make money?

Turns over ₹1 Cr a year. Of every ₹100 of sales, about ₹-81 reaches shareholders as profit, with ₹-72 left at the operating level before interest, tax and depreciation. Each of its 6 employees supports ₹23.0 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹23.0 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 -11% while net margin moved +864% 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-11%

Margin effect+864%

DalalBaazaar Score

51/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Revenue has contracted at 3.9% a year

Quality vs. Valuation

Company Quality

48/ 100

Average

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

Valuation

61/ 100

Fair

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

A reasonable business at a reasonable price — neither the quality nor the valuation stands out in either direction.

Historical Valuation

Current P/E

26.1x

2Y Median

65.5x

28 monthly readings · mean 52.2x · range 23.3x–75.7x

Sector Median

17.0x

median of 4 sector peers

🟢Current valuation is approximately 60% below its 2y median of 65.5x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

⚠️Against its sector it trades 53% above the peer median of 17.0x.

vs. its own history

Cheap

65.5x median over 28 months · -60%

vs. sector peers

Expensive

17.0x median of 4 peers · +53%

vs. generic bands

Fair

15x–35x

EV/EBITDA

—

PEG

—

What's Good / What's Bad

🟢 What's Going Well0

Nothing stands out as clearly improving on the years of data available.

🔴 What Needs Attention2

Return on equity is falling
ROE has dropped from -0.5% to -3.9% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from -0.9% to -4.2% — often a sign of competition or overexpansion.

Red Flags

2 items require attention · 2 high

🔴The company is lossmakingFinancial
Net profit of -₹1 Cr in the latest reported year.
🔴Significant margin compressionFinancial
EBITDA margin has fallen 62.1 points, from -9.8% to -71.9%.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Priced below its own history
The stock trades 60% below its own median multiple. If the business performs as it has and simply re-rates back to normal, that gap is return on its own.

🔴 Bear CaseWhat could go wrong?

Margins are being competed away
EBITDA margin has fallen from -9.8% to -71.9%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
A premium to the sector to defend
It trades 53% above the peer median. That premium needs a reason that persists, or it closes.
Returns on shareholder capital are falling
ROE has dropped from -0.5% to -3.9%. Each rupee of equity earns less than it did, so profit growth increasingly depends on raising more capital rather than on the existing base working harder.
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

1EBITDA margin holds above -74%✓ -71.9%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Return on equity stays above 8%✗ -3.9%
For a lender this is the cleanest single read on whether the book is being grown profitably.
3Valuation vs its own median of 65.5x✓ 26.1x today
A re-rating above its own history needs a reason; without one it is just a higher price.

Investment Checklist

6 / 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

4 good · 3 neutral · 4 weak

Market Cap

₹22 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

26.1x

Fair

Fairly valued against the generic band

P/B Ratio

0.78x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹2.01

Profitable

Profitable on a per-share basis

ROE

-3.9%

Weak

Weak capital efficiency

ROCE

-4.2%

Weak

Low return on total capital employed

Debt/Equity

4.88x

High

High leverage

Revenue Growth (YoY)

95.0%

Healthy

Healthy top-line growth

Profit Growth (YoY)

140.7%

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

-₹3 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

Operating Margin

92.8%

Good

Healthy core-business profitability

Net Margin

24.9%

Good

Strong bottom-line conversion

Current Ratio

4.24

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

-0.38

Defensive

Steadier than the market

52W Range Position

61%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

51.7 / 52.3

Bearish alignment (short < long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

52.0

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹2 Cr	₹1 Cr	₹2 Cr	₹1 Cr	-3.9%
EBITDA	-₹0 Cr	₹1 Cr	₹0 Cr	-₹1 Cr	—
EBITDA Margin	-9.8%	59.8%	20.4%	-71.9%	—
PAT (Net Profit)	-₹0 Cr	₹1 Cr	₹0 Cr	-₹1 Cr	—
EPS	₹-0.31	₹2.02	₹0.74	₹-2.62	—
ROE	-0.5%	2.9%	1.0%	-3.9%	—
ROCE	-0.9%	2.6%	1.4%	-4.2%	—
Total Debt	₹2 Cr	₹1 Cr	₹1 Cr	₹1 Cr	-2.6%
Free Cash Flow	₹5 Cr	-₹5 Cr	₹1 Cr	-₹3 Cr	—

🔴 Revenue has shrunk at 3.9% a year over 3 years.

🔴 EBITDA Margin has fallen from -9.8% to -71.9% over 3 years (-62.1 pts).

🔴 ROE has fallen from -0.5% to -3.9% over 3 years (-3.4 pts).

🔴 ROCE has fallen from -0.9% to -4.2% over 3 years (-3.4 pts).

🟢 Total Debt has shrunk at 2.6% a year over 3 years.

🔴 Free Cash Flow has turned negative, from ₹5 Cr to -₹3 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹33 Cr

Total Liabilities

₹4 Cr

Cash & Equivalents

₹1 Cr

Operating Cash Flow

-₹2 Cr

Capex

-₹1 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

85.8%

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 positive1 mixed4 general

PARAGON FINANCE LTD. Share Price

Upstox, 09 Oct

Paragon Chain USD (XPGN-USD) latest stock news and headlines

Yahoo Finance UK, 15 Oct

Paragon Finance closes trading window from Oct 1 for Q2FY27 results

scanx.trade, 26 SeptResults

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

Paragon Finance AGM passes all resolutions with 99.99% support

scanx.trade, 26 Sept

Paragon Advanced Labs Faces Sharp Selling Pressure as Investor Caution Raises Downside Risks

kalkine.ca, 09 Oct

Paragon Finance net profit jumps 140% to ₹337 crore in Q1FY26

scanx.trade, 11 AugResults

🟢Potentially positiveReported improvement. Check whether it came from volume, price or a one-off item before treating it as a trend.

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.

DalalBaazaar Thesis

StrongFinancial Health · Valuation

MiddlingBusiness Quality

WeakGrowth · Profitability · Risk

Points for each in the Score ↑

Unremarkable in both directions

A reasonable business at a reasonable price. Nothing here is alarming and nothing is compelling, which usually means the decision rests on things this data cannot see — the industry's direction, management's intent, and what else is available to you. 2 high-severity red flags sit above this conclusion and should be read first.

1 of 3 tripwires tripped — Return on equity stays above 8% · see Key things to watch ↑