Check Before You Invest : Challani Capital Ltd

Q: Which industry/sub-sector does Challani Capital Ltd belong to?

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

Q: Is Challani Capital Ltd a good quality company?

Challani Capital 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 Challani Capital Ltd undervalued or overvalued?

Challani Capital 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. Price to Earnings, Current: 21.68, Historic Median: 17.07. Price to Book, Current: 4.1, Historic Median: 4.16. Price to Sales, Current: 29.7, Historic Median: -. EV to EBITDA, Current: 21.66, Historic Median: 25.09

Q: Is Challani Capital Ltd a good buy now?

Challani Capital 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 Challani Capital Ltd?

Challani Capital Ltd Operating Income growth is 110.06% for FY-2025, which is below its 5-year CAGR of 142.31%, indicating slower growth.

Q: Return on Assets of Challani Capital Ltd?

Challani Capital Ltd Return on Asset is 27.1%, which is above its 5-year historical median of 22.5%, indicating improved earnings on assets. Efficiency & Key Metrics. NPM (%), Current: 74.14, Historic Median: 74.14. PPOP (%), Current: 250.94, Historic Median: -118.18. RoA (%), Current: 27.1, Historic Median: 22.5

Q: Return on Equity (ROE) of Challani Capital Ltd?

Challani Capital Ltd Return on Equity is 28.2% for FY-2025, which is above its 5-year historical median of 24.2%, indicating the business is making better use of its shareholders capital.

Q: Pre-provisioning operating profit margin of Challani Capital Ltd?

Challani Capital Ltd Pre-provisioning operating profit margin, which is the bank’s core operating profit before provisioning for bad loans, is 250.94% for FY-2025, which is above its 5-year median(-118.18%), indicating increasing margins.

Q: Net Profit Margin of Challani Capital Ltd?

Challani Capital 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 74.14% for FY-2025, which is in line with its 5-year median( 74.14%), indicating stable margins.

Q: Does its ROIC exceed its WACC?

Challani Capital Ltd return on invested capital (ROIC) is 28.19% for FY-2025, is higher than its estimated weighted average cost of capital (WACC) of 14%, indicating value creation.

Snapshot

Q.1 Which industry/sub-sector does Challani Capital Ltd belong to?

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

Q.2 Is Challani Capital Ltd a good quality company?

Challani Capital 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 Challani Capital Ltd undervalued or overvalued?

Challani Capital 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	21.68	17.07
Price to Book	4.1	4.16
Price to Sales	29.7	-
EV to EBITDA	21.66	25.09

Q.4 Is Challani Capital Ltd a good buy now?

Challani Capital 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 Challani Capital Ltd?

Challani Capital Ltd Operating Income growth is 110.06% for FY-2025, which is below its 5-year CAGR of 142.31%, indicating slower growth.

Q.2 Return on Assets of Challani Capital Ltd?

Challani Capital Ltd Return on Asset is 27.1%, which is above its 5-year historical median of 22.5%, indicating improved earnings on assets.

	Current Level	5-year Historic Median
NPM (%)	74.14	74.14
PPOP (%)	250.94	-118.18
RoA (%)	27.1	22.5

Q.3 Return on Equity (ROE) of Challani Capital Ltd?

Challani Capital Ltd Return on Equity is 28.2% for FY-2025, which is above its 5-year historical median of 24.2%, indicating the business is making better use of its shareholders capital.

Q.4 Pre-provisioning operating profit margin of Challani Capital Ltd?

Challani Capital Ltd Pre-provisioning operating profit margin, which is the bank’s core operating profit before provisioning for bad loans, is 250.94% for FY-2025, which is above its 5-year median(-118.18%), indicating increasing margins.

Q.5 Net Profit Margin of Challani Capital Ltd?

Challani Capital 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 74.14% for FY-2025, which is in line with its 5-year median( 74.14%), indicating stable margins.

Q.6 Does its ROIC exceed its WACC?

Challani Capital Ltd return on invested capital (ROIC) is 28.19% for FY-2025, is higher than its estimated weighted average cost of capital (WACC) of 14%, indicating value creation.

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

Q.7 Total Asset growth of Challani Capital Ltd?

Challani Capital Ltd Total Asset growth is 59.66% for FY-2025, which is above its 5-year CAGR of -8.48%, indicating faster growth.

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

Q.8 Capital Adequacy ratio of Challani Capital Ltd?

Challani Capital Ltd Capital Adequacy ratio (CAR) is 115.3% for FY-2025, which is above the regulatory requirement of 15%, indicating strong capital position.

Ownership & governance

D: Promoter shareholding and pledge status of Challani Capital Ltd?

Q.1 Promoter shareholding and pledge status of Challani Capital Ltd?

Promoters hold 74.99% of the Challani Capital Ltd, with 53.36% of their stake pledged, indicating high pledge risk.

Peer comparison (industry-wise, mcap)

E: How does Challani Capital Ltd performance compare with that of its Peers?

Q.1 AUM Growth of Challani Capital Ltd vs Industry Peers?

Challani Capital Ltd AUM CAGR is -8.48%, 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 Challani Capital Ltd vs industry peers

Challani Capital 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 (%)	74.14	12.87
PPOP (%)	250.94	-
RoA (%)	27.1	1.4

Q.3 Operating efficiency of Challani Capital Ltd vs industry peers?

Challani Capital Ltd ROCE (20.9) is above the industry median of (4.15); while the current ROE (24.2) 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 (%)	74.14	12.87
PPOP (%)	250.94	-
RoA (%)	27.1	1.4
ROCE (%)	28.2	4.15
ROE (%)	28.2	2.3

Valuation & price assessment

Q.1 Stock return of Challani Capital Ltd over the last decade?

Over the last 9 years, the stock has delivered a CAGR of 19.4% based on the current price.

	9Y	5Y	3Y	1Y
Share Price CAGR	19.4%	43%	24.3%	-16.7%

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	21.68	17.07	29.12
Price to Book	4.1	4.16	1.11
Price to Sales	29.7	-	9.10
EV to EBITDA	21.66	25.09	11.77

Q.3 Valuation ratios of Challani Capital Ltd vs historical and industry averages?

The current Price-to-Book (P/B) ratio of 4.1 is lower than its historical median of 4.16, indicating that the stock is trading below its historical average valuation.

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