Check Before You Invest : Raama Finance Ltd

Q: Which industry/sub-sector does Raama Finance Ltd belong to?

Raama Finance Ltd belongs to the BFSI sector, operating specifically within the Finance - NBFC segment.

Q: Is Raama Finance Ltd a good quality company?

Raama Finance Ltd is a quality company, based on a 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: Is Raama Finance Ltd undervalued or overvalued?

Raama Finance Ltd appears 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. Price to Earnings, Current: 204.54, Historic Median: 285.05. Price to Book, Current: 7.11, Historic Median: 1.12. Price to Sales, Current: 37.05, Historic Median: 12.53. EV to EBITDA, Current: 147.2, Historic Median: 297.99

Q: Is Raama Finance Ltd a good buy now?

Raama Finance 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

Q: Total Income growth of Raama Finance Ltd?

Raama Finance Ltd Operating Income growth is -18.79% for FY-2025, which is below its 5-year CAGR of -9.46%, indicating slower growth.

Q: Return on Assets of Raama Finance Ltd?

Raama Finance Ltd Return on Asset is 0.2%, which is in line with its 5-year historical median of 0.2%, indicating stable earnings on assets. Efficiency & Key Metrics. NPM (%), Current: 3.99, Historic Median: 3.29. PPOP (%), Current: -, Historic Median: -33.33. RoA (%), Current: 0.2, Historic Median: 0.2

Q: Return on Equity (ROE) of Raama Finance Ltd?

Raama Finance Ltd Return on Equity is 0.3% for FY-2025, which is in line with its 5-year historical median of 0.3%, indicating the business is making similar use of its shareholders capital.

Q: Pre-provisioning operating profit margin of Raama Finance Ltd?

Raama Finance Ltd Pre-provisioning operating profit margin, which is the bank’s core operating profit before provisioning for bad loans, is 0% for FY-2025, which is above its 5-year median(-33.33%), indicating increasing margins.

Q: Net Profit Margin of Raama Finance Ltd?

Raama Finance 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 3.99% for FY-2025, which is above its 5-year median( 3.29%), indicating increasing margins.

Q: Does its ROIC exceed its WACC?

Raama Finance Ltd return on invested capital (ROIC) is 0.26% for FY-2025, is lower than its estimated weighted average cost of capital (WACC) of 14%, indicating value erosion.

Snapshot

Q.1 Which industry/sub-sector does Raama Finance Ltd belong to?

Raama Finance Ltd belongs to the BFSI sector, operating specifically within the Finance - NBFC segment.

Q.2 Is Raama Finance Ltd a good quality company?

Raama Finance Ltd is a quality company, based on a 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 Raama Finance Ltd undervalued or overvalued?

Raama Finance Ltd appears 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	204.54	285.05
Price to Book	7.11	1.12
Price to Sales	37.05	12.53
EV to EBITDA	147.2	297.99

Q.4 Is Raama Finance Ltd a good buy now?

Raama Finance 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 Raama Finance Ltd?

Raama Finance Ltd Operating Income growth is -18.79% for FY-2025, which is below its 5-year CAGR of -9.46%, indicating slower growth.

Q.2 Return on Assets of Raama Finance Ltd?

Raama Finance Ltd Return on Asset is 0.2%, which is in line with its 5-year historical median of 0.2%, indicating stable earnings on assets.

	Current Level	5-year Historic Median
NPM (%)	3.99	3.29
PPOP (%)	-	-33.33
RoA (%)	0.2	0.2

Q.3 Return on Equity (ROE) of Raama Finance Ltd?

Raama Finance Ltd Return on Equity is 0.3% for FY-2025, which is in line with its 5-year historical median of 0.3%, indicating the business is making similar use of its shareholders capital.

Q.4 Pre-provisioning operating profit margin of Raama Finance Ltd?

Raama Finance Ltd Pre-provisioning operating profit margin, which is the bank’s core operating profit before provisioning for bad loans, is 0% for FY-2025, which is above its 5-year median(-33.33%), indicating increasing margins.

Q.5 Net Profit Margin of Raama Finance Ltd?

Raama Finance 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 3.99% for FY-2025, which is above its 5-year median( 3.29%), indicating increasing margins.

Q.6 Does its ROIC exceed its WACC?

Raama Finance Ltd return on invested capital (ROIC) is 0.26% 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.7 Total Asset growth of Raama Finance Ltd?

Raama Finance Ltd Total Asset growth is -9.63% for FY-2025, which is below its 5-year CAGR of -1.67%, indicating slower growth.

Ownership & governance

D: Promoter shareholding and pledge status of Raama Finance Ltd?

Q.1 Promoter shareholding and pledge status of Raama Finance Ltd?

Promoters hold 54.93% of the Raama Finance Ltd, with 0.00% of their stake pledged, indicating no pledge risk.

Peer comparison (industry-wise, mcap)

E: How does Raama Finance Ltd performance compare with that of its Peers?

Q.1 AUM Growth of Raama Finance Ltd vs Industry Peers?

Raama Finance Ltd AUM CAGR is -1.67%, compared to the 5-year industry median CAGR of 9.71%, indicating slower growth and losing its market share.

Q.2 Profit metrics (NPM, PPOP, RoA) of Raama Finance Ltd vs industry peers

Raama Finance Ltd profit metrics are in line with the industry median level of 4.76%, indicating similar profitability compared to peers.

Profit Metrics

	Current Level	5-year Industry Median
NPM (%)	3.99	12.87
PPOP (%)	-	-
RoA (%)	0.2	1.4

Q.3 Operating efficiency of Raama Finance Ltd vs industry peers?

Raama Finance Ltd ROCE (0.3) is below the industry median of (4.15); while the current ROE (0.3) are below than the 5-year average Industry ROE (2.3). This shows that the business is positioned in the bottom quartile of the industry.

Operating Efficiency

	Current Level	5-year Industry Median
NPM (%)	3.99	12.87
PPOP (%)	-	-
RoA (%)	0.2	1.4
ROCE (%)	0.3	4.15
ROE (%)	0.3	2.3

Valuation & price assessment

Q.1 Stock return of Raama Finance Ltd over the last decade?

Over the last 9 years, the stock has delivered a CAGR of -8.3% based on the current price.

	9Y	5Y	3Y	1Y
Share Price CAGR	-8.3%	109.3%	134.7%	261.4%

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	204.54	285.05	29.12
Price to Book	7.11	1.12	1.11
Price to Sales	37.05	12.53	9.10
EV to EBITDA	147.2	297.99	11.77

Q.3 Valuation ratios of Raama Finance Ltd vs historical and industry averages?

The current Price-to-Book (P/B) ratio of 7.11 is higher than its historical median of 1.12, indicating that the stock is trading above its historical average valuation.

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