Check Before You Invest : Karnavati Finance Ltd

Snapshot

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

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

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

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

Q.3 Is Karnavati Finance Ltd undervalued or overvalued?

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

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

Karnavati 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 Karnavati Finance Ltd?

Karnavati Finance Ltd Operating Income growth is -48.36% for FY-2025, which is below its 5-year CAGR of -10.67%, indicating slower growth.

Q.2 Return on Assets of Karnavati Finance Ltd?

Karnavati Finance Ltd Return on Asset is -6.7%, which is below its 5-year historical median of 0.6%, indicating deteriorated earnings on assets.

	Current Level	5-year Historic Median
NPM%	-106.89	10.1
PPOP%	-84.62	-52.29
RoA%	-6.7	0.6

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

Karnavati Finance Ltd Return on Equity is -15.2% for FY-2025, which is below its 5-year historical median of 1%, indicating the business is making worse use of its shareholders capital.

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

Karnavati Finance Ltd Pre-provisioning operating profit margin, which is the bank’s core operating profit before provisioning for bad loans, is -84.62% for FY-2025, which is below its 5-year median(-52.29%), indicating decreasing margins.

Q.5 Net Profit Margin of Karnavati Finance Ltd?

Karnavati 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 -106.89% for FY-2025, which is below its 5-year median( 10.1%), indicating decreasing margins.

Q.6 Total Asset growth of Karnavati Finance Ltd?

Karnavati Finance Ltd Total Asset growth is -24.79% for FY-2025, which is below its 5-year CAGR of -2.4%, indicating slower growth.

Ownership & governance

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

Promoters hold 62.06% of the Karnavati Finance Ltd, with 0.00% of their stake pledged, indicating no pledge risk.

Peer comparison (industry-wise, mcap)

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

Karnavati Finance Ltd AUM CAGR is -2.4%, 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 Karnavati Finance Ltd vs industry peers

Karnavati Finance Ltd profit metrics are below the industry median level of 7.31%, indicating weaker profitability compared to peers.

Profit Metrics

	Current Level	5-year Industry Median
NPM%	-106.89	15.95
PPOP%	-84.62	4.54
RoA%	-6.7	1.45

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

Karnavati Finance Ltd ROCE (1.2) is below the industry median of (4.4); while the current ROE (1) are below than the 5-year average Industry ROE (2.7). This shows that the business is positioned in the bottom quartile of the industry.

Operating Efficiency

	Current Level	5-year Industry Median
NPM%	-106.89	15.95
PPOP%	-84.62	4.54
RoA%	-6.7	1.45
ROCE%	-2.1	4.4
ROE%	-15.2	2.7

Valuation & price assessment

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

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

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

	9Y	5Y	3Y	1Y
Share Price CAGR	-19.4%	-0.6%	-38.2%	-31.4%

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	-	89.52	28.96
Price to Book	1.41	1.90	1.11
Price to Sales	4.8	11.90	9.10
EV to EBITDA	44.67	42.09	11.77

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

The current Price to book ratio (P/B) 1.41% is lower than its historical median of 1.90%, 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?

Karnavati Finance Ltd return on invested capital (ROIC) is -3.55% for FY-2025, is lower than its estimated weighted average cost of capital (WACC) of 14%, indicating value erosion.

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