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INVESTMENT INSIGHTS

Check Before You Invest : Vardhman Holdings Ltd

BSE: 500439 NSE: VHL ISIN: INE701A01023
  |   Sector:  BFSI   |   Industry:  Finance - NBFC

Snapshot

Q.1 Which industry/sub-sector does Vardhman Holdings Ltd belong to?
Vardhman Holdings Ltd belongs to the BFSI sector, operating specifically within the Finance - NBFC segment.
Q.2 Is Vardhman Holdings Ltd a good quality company?
Vardhman Holdings 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 Vardhman Holdings Ltd undervalued or overvalued?
Vardhman Holdings Ltd appears Fair, as its key valuation ratios are in line with 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 27.79 34.65
Price to Book 1.09 1.17
Price to Sales 20.76 23.48
EV to EBITDA 20.84 25.14
Q.4 Is Vardhman Holdings Ltd a good buy now?
Vardhman Holdings Ltd is a good buy now, based on strong price trend analysis suggesting prices may rise. 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 Vardhman Holdings Ltd?
Vardhman Holdings Ltd Operating Income growth is 27.58% for FY-2025, which is above its 5-year CAGR of 3.37%, indicating faster growth.

Q.2 Return on Assets of Vardhman Holdings Ltd?
Vardhman Holdings Ltd Return on Asset is 4%, which is above its 5-year historical median of 3.7%, indicating improved earnings on assets.
Current Level 5-year
Historic Median
NPM (%) 65.6 74.46
PPOP (%) 25.58 25.58
RoA (%) 4 3.7

Q.3 Return on Equity (ROE) of Vardhman Holdings Ltd?
Vardhman Holdings Ltd Return on Equity is 4% for FY-2025, which is above its 5-year historical median of 3.6%, indicating the business is making better use of its shareholders capital.

Q.4 Pre-provisioning operating profit margin of Vardhman Holdings Ltd?
Vardhman Holdings Ltd Pre-provisioning operating profit margin, which is the bank’s core operating profit before provisioning for bad loans, is 25.58% for FY-2025, which is in line with its 5-year median(25.58%), indicating stable margins.

Q.5 Net Profit Margin of Vardhman Holdings Ltd?
Vardhman Holdings 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 65.6% for FY-2025, which is below its 5-year median( 74.46%), indicating decreasing margins.

Q.6 Does its ROIC exceed its WACC?
Vardhman Holdings Ltd return on invested capital (ROIC) is 3.96% 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 Vardhman Holdings Ltd?
Vardhman Holdings Ltd Total Asset growth is 3.07% for FY-2025, which is below its 5-year CAGR of 8.45%, indicating slower growth.

C: How strong is the bank’s capital position and asset quality?

Q.8 Capital Adequacy ratio of Vardhman Holdings Ltd?
Vardhman Holdings Ltd Capital Adequacy ratio (CAR) is 50.91% for FY-2025, which is above the regulatory requirement of 15%, indicating strong capital position.

Ownership & governance

D: Promoter shareholding and pledge status of Vardhman Holdings Ltd?

Q.1 Promoter shareholding and pledge status of Vardhman Holdings Ltd?
Promoters hold 74.90% of the Vardhman Holdings Ltd, with 0.00% of their stake pledged, indicating no pledge risk.

Peer comparison (industry-wise, mcap)

E: How does Vardhman Holdings Ltd performance compare with that of its Peers?

Q.1 AUM Growth of Vardhman Holdings Ltd vs Industry Peers?
Vardhman Holdings Ltd AUM CAGR is 8.45%, 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 Vardhman Holdings Ltd vs industry peers
Vardhman Holdings Ltd profit metrics are above the industry median level of 4.76%, indicating stronger profitability compared to peers.
Profit Metrics
Current Level 5-year
Industry Median
NPM (%) 65.6 12.87
PPOP (%) 25.58 -
RoA (%) 4 1.4

Q.3 Operating efficiency of Vardhman Holdings Ltd vs industry peers?
Vardhman Holdings Ltd ROCE (4.7) is above the industry median of (4.15); while the current ROE (3.6) are above than the 5-year average Industry ROE (2.3). This shows that the business is positioned in the top quartile of the industry.
Operating Efficiency
Current Level 5-year
Industry Median
NPM (%) 65.6 12.87
PPOP (%) 25.58 -
RoA (%) 4 1.4
ROCE (%) 5.6 4.15
ROE (%) 4 2.3

Valuation & price assessment

Q.1 Stock return of Vardhman Holdings Ltd over the last decade?
Over the last 9 years, the stock has delivered a CAGR of 12.5% based on the current price.
9Y 5Y 3Y 1Y
Share Price
CAGR		 12.5% 15.9% 10.8% 8.7%
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 27.79 34.65 29.12
Price to Book 1.09 1.17 1.11
Price to Sales 20.76 23.48 9.10
EV to EBITDA 20.84 25.14 11.77
Q.3 Valuation ratios of Vardhman Holdings Ltd vs historical and industry averages?
The current Price-to-Book (P/B) ratio of 1.09 is lower than its historical median of 1.17, indicating that the stock is trading below its historical average valuation.

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