Purple Finance Limited

Financial Services — Credit Services · BSE

₹68.00+₹0.20 (+0.29%)

DalalBaazaar Score

58 / 100

🟡 Moderate

Verdict

CAUTION

Risk

Very High

Driven by short-term liabilities exceed short-term assets, negative free cash flow, the company is currently loss-making.

In simple words: The company is currently losing money, 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, 6:07 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 Purple Finance Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Purple Finance Limited, a non-deposit taking non-banking financial company, provides secured business loans to micro and small business entrepreneurs in India.

IndustryCredit Services

SectorFinancial Services

Employees462

Annual revenue₹33 Cr

How does it make money?

Turns over ₹33 Cr a year. Of every ₹100 of sales, about ₹-20 reaches shareholders as profit, with ₹-62 left at the operating level before interest, tax and depreciation. Each of its 462 employees supports ₹7.1 lakh of revenue a year, the signature of a people-led business.

EBITDA margin-61.6%

Net margin-19.5%

Revenue / employee₹7.1 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.

BAJAJ FINANCE LIMITEDP/E 30.2x · ROE 17.8%

STATE BANK OF INDIAP/E 10.3x · ROE 15.2%

HDFC BANK LTDP/E 15.9x · ROE 13.8%

ICICI BANK LTD.P/E 18.1x · ROE 16.5%

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.

ROCE-4.6%

ROE-4.9%

Peer median ROE16.5%

What has been driving growth?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved +2966% while net margin moved -97% 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+2966%

Margin effect-97%

DalalBaazaar Score

58/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Return on equity is negative
✓ ROE has improved by 37.1 points over the period

Quality vs. Valuation

Company Quality

65/ 100

Good

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

Valuation

29/ 100

Expensive

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

A good business, but the price already reflects that. The quality is real; the question is whether you are overpaying for it today.

vs. its own history

Not enough price and earnings history

vs. sector peers

Not enough peers with a usable P/E

vs. generic bands

N/A

No P/E — the company is lossmaking

P/E (Trailing)

Not meaningful

P/B

3.05x

EV/EBITDA

—

PEG

—

Dividend Yield

None

What's Good / What's Bad

🟢 What's Going Well3

Margins are improving
EBITDA margin is up from -646.5% to -61.6% over 3 years.
Return on equity is rising
ROE has improved from -42.0% to -4.9%.
Return on capital is rising
ROCE has improved from -42.0% to -4.6%.

🔴 What Needs Attention1

Short-term liquidity is tight
Current ratio of 0.71 — near-term obligations exceed near-term assets.

Red Flags

3 items require attention · 2 high · 1 watch

🔴Thin interest coverageFinancial
Operating profit covers interest only -36.5x — little room if earnings dip.
🔴The company is lossmakingFinancial
Net profit of -₹6 Cr in the latest reported year.
🟡Shareholders have been dilutedOwnership
Shares outstanding are up 49% over 3 years — each existing share owns a smaller slice of the company.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Margin expansion has further to run
EBITDA margin has risen from -646.5% to -61.6%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.

🔴 Bear CaseWhat could go wrong?

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.
Several serious flags at once
2 high-severity checks triggered. Individually each has an explanation; together they raise the chance that something structural is wrong rather than a one-off.

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

1Revenue growth stays above 160% a year✓ 213.0% CAGR
Latest reported year was 230.5%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above -64%✓ -61.6%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Return on equity stays above 8%✗ -4.9%
For a lender this is the cleanest single read on whether the book is being grown profitably.
4Interest cover stays above 3x✗ -36.5x
How much operating profit can fall before interest stops being comfortably covered.

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

2 good · 4 neutral · 5 weak

Market Cap

₹525 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

Not meaningful

Loss-making

Earnings are negative, so a P/E multiple can't be read here

P/B Ratio

3.05x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹-0.22

Loss-making

Negative earnings per share — the business is losing money

ROE

-4.9%

Weak

Weak capital efficiency

ROCE

-4.6%

Weak

Low return on total capital employed

Debt/Equity

0.83x

Moderate

Moderate leverage

Revenue Growth (YoY)

230.5%

Healthy

Healthy top-line growth

Profit Growth (YoY)

58.6%

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

-₹99 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

CMP

₹68

Operating Margin

-0.5%

Weak

Thin margins leave little room for error

Net Margin

-2.8%

Weak

Very little revenue reaches the bottom line

Current Ratio

0.71

Tight

Tight short-term liquidity

Beta (vs Nifty)

1.05

Market-like

Moves roughly in line with the market

52W Range Position

76%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

70.4 / 71.8

Bearish alignment (short < long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

41.6

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹1 Cr	₹3 Cr	₹13 Cr	₹33 Cr	+213.0%
EBITDA	-₹7 Cr	-₹13 Cr	-₹20 Cr	-₹20 Cr	—
EBITDA Margin	-646.5%	-364.5%	-156.9%	-61.6%	—
PAT (Net Profit)	-₹7 Cr	-₹8 Cr	-₹16 Cr	-₹6 Cr	—
EPS	₹-1.79	₹-1.93	₹-3.97	₹-1.2	—
ROE	-42.0%	-15.8%	-20.2%	-4.9%	—
ROCE	-42.0%	-18.4%	-16.4%	-4.6%	—
Total Debt	₹0 Cr	₹24 Cr	₹75 Cr	₹109 Cr	+615.8%
Free Cash Flow	-₹7 Cr	-₹62 Cr	-₹79 Cr	-₹99 Cr	—

🟢 Revenue has grown at 213.0% a year over 3 years.

🟢 EBITDA Margin has risen from -646.5% to -61.6% over 3 years (+584.9 pts).

🟢 ROE has risen from -42.0% to -4.9% over 3 years (+37.1 pts).

🟢 ROCE has risen from -42.0% to -4.6% over 3 years (+37.3 pts).

🔴 Total Debt has grown at 615.8% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹245 Cr

Total Liabilities

₹113 Cr

Total Debt

₹109 Cr

Cash & Equivalents

₹10 Cr

Operating Cash Flow

-₹98 Cr

Capex

-₹1 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

57.6%

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

4 mixed2 general

Purple Style Labs Yearly results, Financial Summary

The Economic Times, 14 OctResults

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

Purple Finance open offer to acquire 26% stake at ₹55 per share

scanx.trade, 01 JulM&A

🟡Mixed / dependsAcquisitions change the balance sheet before they change the earnings. Look at what was paid, how it was funded, and whether debt rose.

Purple Finance Ltd. Peer Comparison – Compare with Others

Value Research, 04 Sept

Purple Finance to acquire Saksham Gram Credit for rural expansion

Moneycontrol.com, 22 JulCapacity

🟡Mixed / dependsCapacity additions can raise revenue over two to three years, but the capital spend usually pressures free cash flow first. Worth checking whether the capex is funded from operations or from borrowing.

Purple Finance to acquire Saksham Gram Credit for rural expansion

The Economic Times, 22 JulCapacity

Purple Finance Ltd. Shareholding Pattern – Promoters, FIIs & DIIs

Value Research, 27 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.

DalalBaazaar Thesis

🔴Business QualityWeak8.5/20

🟢Financial HealthStrong17/20

🟢GrowthStrong18.4/20

🔴ProfitabilityWeak5/15

🔴ValuationDemanding5.1/15

🔴RiskHigh3.7/10

Good business, demanding price

The quality is real and the price already reflects it. Buying here is a bet that the business keeps compounding for long enough to grow into the multiple — which good businesses often do, but it removes the margin for error that a lower price would have given you. 2 high-severity red flags sit above this conclusion and should be read first.

This thesis breaks if

✓Revenue growth stays above 160% a year213.0% CAGR
✓EBITDA margin holds above -64%-61.6%
✗Return on equity stays above 8%-4.9%
✗Interest cover stays above 3x-36.5x