Paul Merchants Limited

Financial Services — Capital Markets · NSE

₹478.90+₹14.20 (+3.06%)

DalalBaazaar Score

58 / 100

🟡 Moderate

Verdict

CAUTION

Risk

Moderate

Driven by micro-cap size, which brings thin liquidity, falling profits.

In simple words: The business is earning a fairly low return on the money invested in it, but sales are shrinking. The direction of profits is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:06 pm

Caution warranted. Multiple fundamental metrics — flagged in red below — point to either valuation stretch, leverage risk, or weakening profitability. This doesn't mean avoid the stock outright, but it does mean the burden of proof is on the growth story to justify the current price.

Understanding the Business

Company site ↗

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

What does this company do?

Paul Merchants Limited, together with its subsidiaries, provides financial services in India. It operates through Forex, Travel, and Other segments.

IndustryCapital Markets

SectorFinancial Services

Employees318

Annual revenue₹2,063 Cr

How does it make money?

Turns over ₹2,063 Cr a year. Of every ₹100 of sales, about ₹13 reaches shareholders as profit, with ₹0 left at the operating level before interest, tax and depreciation. Each of its 318 employees supports ₹6.49 Cr of revenue a year, the signature of a capital- or asset-led business.

EBITDA margin0.4%

Net margin13.0%

Revenue / employee₹6.49 Cr

Who are its competitors?

The closest listed comparisons in its industry are BAJAJ FINANCE LIMITED, HDFC LIFE INS CO LTD, SBI LIFE INSURANCE CO LTD. These are the companies its valuation and returns are measured against elsewhere in this report.

BAJAJ FINANCE LIMITEDP/E 30.2x · ROE 17.8%

HDFC LIFE INS CO LTDP/E 58.4x · ROE 11.3%

SBI LIFE INSURANCE CO LTDP/E 63.9x · ROE 13.7%

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.

ROCE2.2%

ROE30.0%

Peer median ROE13.7%

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved -71% while net margin moved +1972% 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-71%

Margin effect+1972%

DalalBaazaar Score

58/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ ROCE has fallen by 10.4 points — returns are eroding
✗ EBITDA margin of 0.4% is thin — little cushion if costs rise
✗ The business is lossmaking at the net level
• Lender: ROCE is excluded here because borrowing is raw material for this business, not leverage

Quality vs. Valuation

Company Quality

56/ 100

Average

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

Valuation

77/ 100

Cheap

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

7.2x

Sector Median

58.4x

median of 3 sector peers

🟢Against its sector it trades 88% below the peer median of 58.4x.

vs. its own history

Not enough price and earnings history

vs. sector peers

Cheap

58.4x median of 3 peers · -88%

vs. generic bands

Cheap

Below 15x

P/E (Trailing)

7.2x

P/B

0.16x

EV/EBITDA

17.0x

PEG

0.09

Dividend Yield

None

What's Good / What's Bad

🟢 What's Going Well2

Return on equity is rising
ROE has improved from 8.6% to 30.0%.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention2

Return on capital is falling
ROCE has declined from 12.5% to 2.2% — often a sign of competition or overexpansion.
Inventory building faster than sales
Inventory is up 87% against revenue growth of -71% — stock may not be moving.

Red Flags

No automated checks triggered

None of the automated financial checks below were triggered on the years of data available. That is not the same as a clean bill of health — see what could not be checked.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Cheaper than its peers
It trades 88% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

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 -2%✓ 0.4%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Return on equity stays above 28%✓ 30.0%
For a lender this is the cleanest single read on whether the book is being grown profitably.

Investment Checklist

5 / 10 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

Price history

Quick Metrics

5 good · 3 neutral · 3 weak

Market Cap

₹148 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

7.2x

Cheap

Cheap against the generic band

P/B Ratio

0.16x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹66.44

Profitable

Profitable on a per-share basis

ROE

30.0%

Strong

Strong capital efficiency

ROCE

2.2%

Weak

Low return on total capital employed

Debt/Equity

1.14x

Moderate

Moderate leverage

Revenue Growth (YoY)

-2.5%

Shrinking

Sales are contracting

Profit Growth (YoY)

-96.9%

Falling

Profits are shrinking

Dividend Yield

None

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

Free Cash Flow

₹400 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

CMP

₹478.9

Operating Margin

0.7%

Weak

Thin margins leave little room for error

Net Margin

-0.5%

Weak

Very little revenue reaches the bottom line

Current Ratio

15.73

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

1.00

Market-like

Moves roughly in line with the market

52W Range Position

41%

Mid-range

Technical Snapshot

RSI (14)

51.2

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹6,998 Cr	₹6,484 Cr	₹3,319 Cr	₹2,063 Cr	-33.4%
EBITDA	₹82 Cr	₹13 Cr	-₹4 Cr	₹8 Cr	-54.9%
EBITDA Margin	1.2%	0.2%	-0.1%	0.4%	—
PAT (Net Profit)	₹44 Cr	₹55 Cr	₹64 Cr	₹269 Cr	+82.8%
EPS	₹142.71	₹177.13	₹206.99	₹871.41	+82.8%
ROE	8.6%	9.7%	10.2%	30.0%	—
ROCE	12.5%	1.0%	-1.5%	2.2%	—
Total Debt	₹307 Cr	₹493 Cr	₹23 Cr	₹10 Cr	-67.7%
Free Cash Flow	-₹162 Cr	-₹147 Cr	₹444 Cr	₹400 Cr	—

🔴 Revenue has shrunk at 33.4% a year over 3 years.

🔴 EBITDA has shrunk at 54.9% a year over 3 years.

🟡 EBITDA Margin has held roughly flat at 0.4% over 3 years.

🟢 PAT (Net Profit) has grown at 82.8% a year over 3 years.

🟢 EPS has grown at 82.8% a year over 3 years.

🟢 ROE has risen from 8.6% to 30.0% over 3 years (+21.3 pts).

🔴 ROCE has fallen from 12.5% to 2.2% over 3 years (-10.4 pts).

🟢 Total Debt has shrunk at 67.7% a year over 3 years.

🟢 Free Cash Flow has turned positive, from -₹162 Cr to ₹400 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹940 Cr

Total Liabilities

₹42 Cr

Total Debt

₹10 Cr

Cash & Equivalents

₹29 Cr

Operating Cash Flow

₹412 Cr

Capex

-₹12 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

80.5%

Peer Comparison

Company	P/E	ROE
BAJAJ FINANCE LIMITED	30.2x	17.8%
HDFC LIFE INS CO LTD	58.4x	11.3%
SBI LIFE INSURANCE CO LTD	63.9x	13.7%

Recent News

6 general

Paul Merchants (PML) Share/Stock Price Live, NSE

TechGraph, 10 Oct

Paul Merchants Ltd. Peer Comparison – Compare with Others

Value Research, 30 Aug

Paul Merchants sets Sep 4-10 book closure for 42nd AGM

scanx.trade, 21 Aug

Paul Merchants Finance Launches Loan Against Silver, Becomes India's First NBFC to Set Up Exclusive Silver Loan Branches

Business Standard, 19 Aug

Paul Merchants Ltd. Shareholding Pattern – Promoters, FIIs & DIIs

Value Research, 31 Aug

Paul Merchants reappoints Ritesh Vaid as director and DWT after AGM

scanx.trade, 18 Sept

Watch Items

Revenue growth is negative (-2.5%) on the latest reported period — check if this is one-off or a trend.
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

🔴Business QualityWeak4.8/20

🟢Financial HealthStrong17/20

🟡GrowthModest10.5/20

🟡ProfitabilityModerate9.4/15

🟢ValuationAttractive13/15

🔴RiskHigh3.6/10

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.

This thesis breaks if

✓EBITDA margin holds above -2%0.4%
✓Return on equity stays above 28%30.0%