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Check Before You Invest : Corporate Merchant Bankers Ltd

BSE: 540199 NSE: ISIN: INE850R01014
  |   Sector:  BFSI   |   Industry:  Finance - Investment

Snapshot

Q.1 Which industry/sub-sector does Corporate Merchant Bankers Ltd belong to?
Corporate Merchant Bankers Ltd belongs to the BFSI sector, operating specifically within the Finance - Investment segment.
Q.2 Is Corporate Merchant Bankers Ltd a good quality company?
Corporate Merchant Bankers Ltd is a weak quality company, based on a inconsistent multi-year financial track record.

This assessment is based on the bank’s performance on Total Income growth, Pre-Provision Operating Profit, RoA, RoE, CAR, and Asset Quality, along with how these metrics compare with its long-term averages.

Q.3 Is Corporate Merchant Bankers Ltd undervalued or overvalued?
Corporate Merchant Bankers Ltd appears Somewhat overvalued, as its key valuation ratios are higher than their past averages.

Based on the industry it operates in, the relevant valuation ratios include one of the following, P/E, P/BV, P/Sales, EV/EBITDA or a combination of two or more.

Valuation Ratios Current 5-year
Historic Median
Price to Earnings 88.75 -
Price to Book 5.12 1.71
Price to Sales - -
EV to EBITDA 65.78 -99.28
Q.4 Is Corporate Merchant Bankers Ltd a good buy now?
Corporate Merchant Bankers Ltd is not a good buy now, based on weak price trend analysis suggesting prices may fall. However, you need to check its quality and valuation before making a decision

Performance Analysis

We have analysed the performance of the company on the following:

  • How has it performed on generating Profits?

    By checking its Total Income growth, NPM, PPOP, RoA and RoE compared to its last 5-year median.

  • How efficiently has it grown and managed operations?

    By checking its Total Asset growth.

  • How strong is its Capital position and Asset Quality?

    By checking its Capital Adequacy Ratio (CAR), GNPA and NNPA.

A: What are the trends in income and profitability?

Q.1 Total Income growth of Corporate Merchant Bankers Ltd?
Corporate Merchant Bankers Ltd Operating Income growth is 3679.38% for FY-2025, which is above its 5-year CAGR of 83.13%, indicating faster growth.

Q.2 Return on Assets of Corporate Merchant Bankers Ltd?
Corporate Merchant Bankers Ltd Return on Asset is 3.7%, which is above its 5-year historical median of -0.1%, indicating improved earnings on assets.
Current Level 5-year
Historic Median
NPM (%) 59 -4.65
PPOP (%) - -
RoA (%) 3.7 -0.1

Q.3 Return on Equity (ROE) of Corporate Merchant Bankers Ltd?
Corporate Merchant Bankers Ltd Return on Equity is 51.4% for FY-2025, which is above its 5-year historical median of -0.1%, indicating the business is making better use of its shareholders capital.

Q.4 Net Profit Margin of Corporate Merchant Bankers Ltd?
Corporate Merchant Bankers Ltd Net Profit Margin, which is the difference between the rate of interest earned on assets and the rate of interest paid on liabilities, is 59% for FY-2025, which is above its 5-year median( -4.65%), indicating increasing margins.

Q.5 Does its ROIC exceed its WACC?
Corporate Merchant Bankers Ltd return on invested capital (ROIC) is 4.36% for FY-2025, is lower than its estimated weighted average cost of capital (WACC) of 14%, indicating value erosion.

B: Does the bank grow efficiently and manage its operating costs?

Q.6 Total Asset growth of Corporate Merchant Bankers Ltd?
Corporate Merchant Bankers Ltd Total Asset growth is 410.53% for FY-2025, which is above its 5-year CAGR of 89.21%, indicating faster growth.

Ownership & governance

D: Promoter shareholding and pledge status of Corporate Merchant Bankers Ltd?

Q.1 Promoter shareholding and pledge status of Corporate Merchant Bankers Ltd?
Promoters hold 3.12% of the Corporate Merchant Bankers Ltd, with 0.00% of their stake pledged, indicating no pledge risk.

Peer comparison (industry-wise, mcap)

E: How does Corporate Merchant Bankers Ltd performance compare with that of its Peers?

Q.1 AUM Growth of Corporate Merchant Bankers Ltd vs Industry Peers?
Corporate Merchant Bankers Ltd AUM CAGR is 89.21%, compared to the 5-year industry median CAGR of 9.27%, indicating faster growth and gaining its market share.

Q.2 Profit metrics (NPM, PPOP, RoA) of Corporate Merchant Bankers Ltd vs industry peers
Corporate Merchant Bankers Ltd profit metrics are in line with the industry median level of -1.27%, indicating similar profitability compared to peers.
Profit Metrics
Current Level 5-year
Industry Median
NPM (%) 59 3.12
PPOP (%) - -7.72
RoA (%) 3.7 0.8

Q.3 Operating efficiency of Corporate Merchant Bankers Ltd vs industry peers?
Corporate Merchant Bankers Ltd ROCE (-0.1) is below the industry median of (1.8); while the current ROE (-0.1) are below than the 5-year average Industry ROE (0.9). This shows that the business is positioned in the bottom quartile of the industry.
Operating Efficiency
Current Level 5-year
Industry Median
NPM (%) 59 3.12
PPOP (%) - -7.72
RoA (%) 3.7 0.8
ROCE (%) 5.9 1.8
ROE (%) 51.4 0.9

Valuation & price assessment

Q.1 Stock return of Corporate Merchant Bankers Ltd over the last decade?
Over the last 5 years, the stock has delivered a CAGR of 33.82% based on the current price.
9Y 5Y 3Y 1Y
Share Price
CAGR
- 33.8% 54.8% 23.4%
Q.2 How do the current valuation ratios compare with 5-year historical median and industry numbers?
Valuation Ratios Current 5-year
Historic Median
5-year
Industry Median
Price to Earnings 88.75 - 33.75
Price to Book 5.12 1.71 0.95
Price to Sales - - 12.43
EV to EBITDA 65.78 -99.28 10.00
Q.3 Valuation ratios of Corporate Merchant Bankers Ltd vs historical and industry averages?
The current Price-to-Book (P/B) ratio of 5.12 is higher than its historical median of 1.71, indicating that the stock is trading above its historical average valuation.

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