Sakthi Finance Limited

Financial Services — Credit Services · BSE

₹25.99+₹0.60 (+2.36%)

DalalBaazaar Score

67 / 100

🟢 Good

Verdict

NEUTRAL

Risk

Moderate

Driven by 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 modest growth. Nothing obvious stands out as stretched — the usual checks on business quality and management still apply.

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 Sakthi Finance Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Sakthi Finance Limited, a non-banking financial company, provides asset financing services in India. The company is involved in financing of pre-owned commercial vehicles, infrastructure equipment, machineries, interest rates and charges, and consumer education literature, etc.

IndustryCredit Services

SectorFinancial Services

Employees659

Annual revenue₹198 Cr

How does it make money?

Turns over ₹198 Cr a year. Of every ₹100 of sales, about ₹9 reaches shareholders as profit, with ₹8 left at the operating level before interest, tax and depreciation. Each of its 659 employees supports ₹30.1 lakh of revenue a year, the signature of a people-led business.

EBITDA margin7.7%

Net margin8.7%

Revenue / employee₹30.1 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.

ROCE1.0%

ROE7.1%

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 +5% while net margin moved +32% 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+5%

Margin effect+32%

DalalBaazaar Score

67/ 100

Good

Weighted across six categories. Every point is explained below.

✗ Revenue CAGR of only 1.5% — barely ahead of inflation
• Profit CAGR of 11.4%

Quality vs. Valuation

Company Quality

65/ 100

Good

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

Historical Valuation

Current P/E

9.7x

3Y Median

19.3x

40 monthly readings · mean 20.1x · range 8.7x–47.9x

Sector Median

17.0x

median of 4 sector peers

🟢Current valuation is approximately 50% below its 3y median of 19.3x. 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 43% below the peer median of 17.0x.

vs. its own history

Cheap

19.3x median over 40 months · -50%

vs. sector peers

Cheap

17.0x median of 4 peers · -43%

vs. generic bands

Cheap

Below 15x

P/E (Trailing)

9.7x

P/B

0.70x

EV/EBITDA

63.4x

PEG

0.85

Dividend Yield

3.08%

What's Good / What's Bad

🟢 What's Going Well2

Valuation below its historical average
At 9.7x the stock trades 50% below its own median of 19.3x.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention2

Margins are compressing
EBITDA margin has slipped from 20.9% to 7.7% over 3 years.
Return on capital is falling
ROCE has declined from 3.1% to 1.0% — often a sign of competition or overexpansion.

Red Flags

1 item require attention · 1 high

🔴Significant margin compressionFinancial
EBITDA margin has fallen 13.2 points, from 20.9% to 7.7%.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Priced below its own history
The stock trades 50% 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.
Cheaper than its peers
It trades 43% 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?

Margins are being competed away
EBITDA margin has fallen from 20.9% to 7.7%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
Growth barely outpaces inflation
Revenue compounding at 1.5% a year is close to the rate prices rise, so the business is gaining little ground in real terms. That leaves the share price dependent on a re-rating rather than on earnings growth.
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 6%✓ 7.7%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Return on equity stays above 8%✗ 7.1%
For a lender this is the cleanest single read on whether the book is being grown profitably.
3Revenue growth stays above 4% a year✗ 1.5% CAGR
Latest reported year was 6.7%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
4Valuation vs its own median of 19.3x✓ 9.7x today
A re-rating above its own history needs a reason; without one it is just a higher price.

Investment Checklist

7 / 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 · 3 neutral · 3 weak

Market Cap

₹168 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

9.7x

Cheap

Cheap against the generic band

P/B Ratio

0.70x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹2.68

Profitable

Profitable on a per-share basis

ROE

7.1%

Weak

Weak capital efficiency

ROCE

1.0%

Weak

Low return on total capital employed

Debt/Equity

3.94x

High

High leverage

Revenue Growth (YoY)

6.7%

Modest

Modest growth

Profit Growth (YoY)

1.6%

Modest

Slow profit growth

Dividend Yield

3.08%

Healthy

Meaningful cash return while you hold the stock

Free Cash Flow

₹102 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

CMP

₹25.99

Operating Margin

24.1%

Good

Healthy core-business profitability

Net Margin

20.0%

Good

Strong bottom-line conversion

Current Ratio

2.21

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

-0.10

Defensive

Steadier than the market

52W Range Position

23%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

25.5 / 26.8

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

50.7

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹190 Cr	₹203 Cr	₹211 Cr	₹198 Cr	+1.5%
EBITDA	₹40 Cr	₹38 Cr	₹40 Cr	₹15 Cr	-27.2%
EBITDA Margin	20.9%	18.5%	18.9%	7.7%	—
PAT (Net Profit)	₹12 Cr	₹16 Cr	₹17 Cr	₹17 Cr	+11.4%
EPS	₹1.93	₹2.43	₹2.57	₹2.67	+11.4%
ROE	6.0%	7.2%	7.3%	7.1%	—
ROCE	3.1%	2.7%	2.6%	1.0%	—
Total Debt	₹1,050 Cr	₹1,093 Cr	₹921 Cr	₹950 Cr	-3.3%
Free Cash Flow	-₹6 Cr	-₹32 Cr	₹16 Cr	₹102 Cr	—

🟡 Revenue has been broadly flat over 3 years (1.5% a year).

🔴 EBITDA has shrunk at 27.2% a year over 3 years.

🔴 EBITDA Margin has fallen from 20.9% to 7.7% over 3 years (-13.2 pts).

🟢 PAT (Net Profit) has grown at 11.4% a year over 3 years.

🟢 EPS has grown at 11.4% a year over 3 years.

🟢 ROE has risen from 6.0% to 7.1% over 3 years (+1.1 pts).

🔴 ROCE has fallen from 3.1% to 1.0% over 3 years (-2.1 pts).

🟢 Total Debt has shrunk at 3.3% a year over 3 years.

🟢 Free Cash Flow has turned positive, from -₹6 Cr to ₹102 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹1,434 Cr

Total Liabilities

₹1,192 Cr

Total Debt

₹950 Cr

Cash & Equivalents

₹146 Cr

Operating Cash Flow

₹118 Cr

Capex

-₹16 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

91.7%

Corporate Actions

Dividend Rate

₹0.8

Ex-Dividend Date

18 Sept 2026

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

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

Value Research, 31 Aug

Sakthi Finance FY26 Net Profit Rises; Dividend Declared

scanx.trade, 23 MayCapital return

🟢Potentially positiveCash or shares returned to holders. A buyback is only good value if the shares were cheap when bought.

Sakthi Finance Ltd. Peer Comparison – Compare with Others

Value Research, 30 Aug

Sakthi Finance AGM approves 1% commission, ₹50 crore RCPS issue

scanx.trade, 26 SeptCapacity

🟡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.

Indus Finance Ltd. Share Price Technicals and Valuation

Univest, 12 Aug

Sakthi Finance Ltd. Key Financial Ratios – Valuation, Profitability & More

Value Research, 30 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 QualityAdequate12.1/20

🟢Financial HealthStrong17/20

🟡GrowthModest10.4/20

🟡ProfitabilityModerate8.9/15

🟢ValuationAttractive12.8/15

🟡RiskModerate6.2/10

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.

This thesis breaks if

✓EBITDA margin holds above 6%7.7%
✗Return on equity stays above 8%7.1%
✗Revenue growth stays above 4% a year1.5% CAGR
✓Valuation vs its own median of 19.3x9.7x today