Check Before You Invest : Sakthi Finance Ltd

BSE: 511066 NSE: SAKTHIFIN ISIN: INE302E01014

| Sector: BFSI | Industry: Finance - NBFC

Snapshot

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

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

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

Sakthi Finance Ltd is a weak quality company, based on a inconsistent 10-year financial track record.

Q.3 Is Sakthi Finance Ltd undervalued or overvalued?

Sakthi Finance Ltd appears Somewhat Undervalued, as its key valuation ratios are below with their past averages.

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

Sakthi 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

Q.1 Total Income growth of Sakthi Finance Ltd?

Sakthi Finance Ltd Operating Income growth is 3.99% for FY-2025, which is below its 5-year CAGR of 4.78%, indicating slower growth.

Q.2 Return on Assets of Sakthi Finance Ltd?

Sakthi Finance Ltd Return on Asset is 1.2%, which is above its 5-year historical median of 1%, indicating improved earnings on assets.

	Current Level	5-year Historic Median
NPM%	7.75	6.51
PPOP%	6.67	11.11
RoA%	1.2	1

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

Sakthi Finance Ltd Return on Equity is 7.4% for FY-2025, which is above its 5-year historical median of 6.2%, indicating the business is making better use of its shareholders capital.

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

Sakthi Finance Ltd Pre-provisioning operating profit margin, which is the bank’s core operating profit before provisioning for bad loans, is 6.67% for FY-2025, which is below its 5-year median(11.11%), indicating decreasing margins.

Q.5 Net Profit Margin of Sakthi Finance Ltd?

Sakthi 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 7.75% for FY-2025, which is above its 5-year median( 6.51%), indicating increasing margins.

Q.6 Total Asset growth of Sakthi Finance Ltd?

Sakthi Finance Ltd Total Asset growth is -4.08% for FY-2025, which is below its 5-year CAGR of 2.24%, indicating slower growth.

Q.7 Capital Adequacy ratio of Sakthi Finance Ltd?

Sakthi Finance Ltd Capital Adequacy ratio (CAR) is 18.63% for FY-2025, which is above the regulatory requirement of 15%, indicating strong capital position.

Q.8 Asset Quality of Sakthi Finance Ltd?

Sakthi Finance Ltd Gross Non-Performing Assets, which are loans overdue by more than 90 days, is 4.37% for FY-2025, which is below its 5-year median 4.84%, while Net Non-Performing Assets, which is GNPA minus provisions made for bad loans is 2.39% which is in line with its 5-year median( 2.39%), indicating stable asset quality.

Ownership & governance

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

Promoters hold 67.02% of the Sakthi Finance Ltd, with 0.00% of their stake pledged, indicating no pledge risk.

Peer comparison (industry-wise, mcap)

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

Sakthi Finance Ltd AUM CAGR is 2.24%, compared to the 5-year industry median CAGR of 9.9%, indicating slower growth and losing its market share.

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

Sakthi Finance Ltd profit metrics are in line with the industry median level of 7.31%, indicating similar profitability compared to peers.

Profit Metrics

	Current Level	5-year Industry Median
NPM%	7.75	15.95
PPOP%	6.67	4.54
RoA%	1.2	1.45

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

Sakthi Finance Ltd ROCE (10) is above the industry median of (4.4); while the current ROE (6.2) are above than the 5-year average Industry ROE (2.7). This shows that the business is positioned in the top quartile of the industry.

Operating Efficiency

	Current Level	5-year Industry Median
NPM%	7.75	15.95
PPOP%	6.67	4.54
RoA%	1.2	1.45
ROCE%	10.5	4.4
ROE%	7.4	2.7

Valuation & price assessment

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

Over the last 9 years, the stock has delivered a CAGR of 2.7% based on the current price.

Q.2 What return has the stock given over the last decade?

	9Y	5Y	3Y	1Y
Share Price CAGR	2.7%	13.4%	-3%	-45.1%

Q.3 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	10.89	17.96	28.96
Price to Book	0.75	1.02	1.11
Price to Sales	0.84	1.13	9.10
EV to EBITDA	0.77	9.04	11.77

Q.4 Valuation ratios of Sakthi Finance Ltdvs historical and industry averages?

The current Price to book ratio (P/B) 0.75% is lower than its historical median of 1.02%, indicating that at the current price the stock is undervalued. However, you need a deeper analysis to make a better judgement.

Strategic outlook

Q.1 Does its ROIC exceed its WACC?

Sakthi Finance Ltd return on invested capital (ROIC) is 7.36% for FY-2025, is lower than its estimated weighted average cost of capital (WACC) of 14%, indicating value erosion.

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