Check Before You Invest : Sonal Mercantile Ltd

Q: Which industry/sub-sector does Sonal Mercantile Ltd belong to?

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

Q: Is Sonal Mercantile Ltd a good quality company?

Sonal Mercantile Ltd is a average quality company, based on a somewhat consistent 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 Sonal Mercantile Ltd undervalued or overvalued?

Sonal Mercantile 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: 14.07, Historic Median: 13.84. Price to Book, Current: 1.96, Historic Median: 2.46. Price to Sales, Current: 3.78, Historic Median: 4.04. EV to EBITDA, Current: 12.29, Historic Median: 11.53

Q: Is Sonal Mercantile Ltd a good buy now?

Sonal Mercantile 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 Sonal Mercantile Ltd?

Sonal Mercantile Ltd Operating Income growth is -10.23% for FY-2025, which is below its 5-year CAGR of 21.95%, indicating slower growth.

Q: Return on Assets of Sonal Mercantile Ltd?

Sonal Mercantile Ltd Return on Asset is 2.9%, which is in line with its 5-year historical median of 2.9%, indicating stable earnings on assets. Efficiency & Key Metrics. NPM (%), Current: 29.49, Historic Median: 29.49. PPOP (%), Current: -12.5, Historic Median: 37.5. RoA (%), Current: 2.9, Historic Median: 2.9

Q: Return on Equity (ROE) of Sonal Mercantile Ltd?

Sonal Mercantile Ltd Return on Equity is 17.3% for FY-2025, which is below its 5-year historical median of 18.8%, indicating the business is making worse use of its shareholders capital.

Q: Pre-provisioning operating profit margin of Sonal Mercantile Ltd?

Sonal Mercantile Ltd Pre-provisioning operating profit margin, which is the bank’s core operating profit before provisioning for bad loans, is -12.5% for FY-2025, which is below its 5-year median(37.5%), indicating decreasing margins.

Q: Net Profit Margin of Sonal Mercantile Ltd?

Sonal Mercantile 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 29.49% for FY-2025, which is in line with its 5-year median( 29.49%), indicating stable margins.

Q: Does its ROIC exceed its WACC?

Sonal Mercantile Ltd return on invested capital (ROIC) is 7.46% for FY-2025, is lower than its estimated weighted average cost of capital (WACC) of 14%, indicating value erosion.

Check Before You Invest : Sonal Mercantile Ltd

BSE: 538943 NSE: SONAL ISIN: INE321M01017

| Sector: BFSI | Industry: Finance - NBFC

Snapshot

Q.1 Which industry/sub-sector does Sonal Mercantile Ltd belong to?

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

Q.2 Is Sonal Mercantile Ltd a good quality company?

Sonal Mercantile Ltd is a average quality company, based on a somewhat consistent 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 Sonal Mercantile Ltd undervalued or overvalued?

Sonal Mercantile 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	14.07	13.84
Price to Book	1.96	2.46
Price to Sales	3.78	4.04
EV to EBITDA	12.29	11.53

Q.4 Is Sonal Mercantile Ltd a good buy now?

Sonal Mercantile 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 Sonal Mercantile Ltd?

Sonal Mercantile Ltd Operating Income growth is -10.23% for FY-2025, which is below its 5-year CAGR of 21.95%, indicating slower growth.

Q.2 Return on Assets of Sonal Mercantile Ltd?

Sonal Mercantile Ltd Return on Asset is 2.9%, which is in line with its 5-year historical median of 2.9%, indicating stable earnings on assets.

	Current Level	5-year Historic Median
NPM (%)	29.49	29.49
PPOP (%)	-12.5	37.5
RoA (%)	2.9	2.9

Q.3 Return on Equity (ROE) of Sonal Mercantile Ltd?

Sonal Mercantile Ltd Return on Equity is 17.3% for FY-2025, which is below its 5-year historical median of 18.8%, indicating the business is making worse use of its shareholders capital.

Q.4 Pre-provisioning operating profit margin of Sonal Mercantile Ltd?

Sonal Mercantile Ltd Pre-provisioning operating profit margin, which is the bank’s core operating profit before provisioning for bad loans, is -12.5% for FY-2025, which is below its 5-year median(37.5%), indicating decreasing margins.

Q.5 Net Profit Margin of Sonal Mercantile Ltd?

Sonal Mercantile 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 29.49% for FY-2025, which is in line with its 5-year median( 29.49%), indicating stable margins.

Q.6 Does its ROIC exceed its WACC?

Sonal Mercantile Ltd return on invested capital (ROIC) is 7.46% 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 Sonal Mercantile Ltd?

Sonal Mercantile Ltd Total Asset growth is -6.28% for FY-2025, which is below its 5-year CAGR of 15.48%, indicating slower growth.

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

Q.8 Capital Adequacy ratio of Sonal Mercantile Ltd?

Sonal Mercantile Ltd Capital Adequacy ratio (CAR) is 19.4% for FY-2025, which is above the regulatory requirement of 15%, indicating strong capital position.

Ownership & governance

D: Promoter shareholding and pledge status of Sonal Mercantile Ltd?

Q.1 Promoter shareholding and pledge status of Sonal Mercantile Ltd?

Promoters hold 24.92% of the Sonal Mercantile Ltd, with 0.00% of their stake pledged, indicating no pledge risk.

Peer comparison (industry-wise, mcap)

E: How does Sonal Mercantile Ltd performance compare with that of its Peers?

Q.1 AUM Growth of Sonal Mercantile Ltd vs Industry Peers?

Sonal Mercantile Ltd AUM CAGR is 15.48%, compared to the 5-year industry median CAGR of 9.71%, indicating faster growth and gaining its market share.

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

Sonal Mercantile 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 (%)	29.49	12.87
PPOP (%)	-12.5	-
RoA (%)	2.9	1.4

Q.3 Operating efficiency of Sonal Mercantile Ltd vs industry peers?

Sonal Mercantile Ltd ROCE (10.8) is above the industry median of (4.15); while the current ROE (18.8) 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 (%)	29.49	12.87
PPOP (%)	-12.5	-
RoA (%)	2.9	1.4
ROCE (%)	10.4	4.15
ROE (%)	17.3	2.3

Valuation & price assessment

Q.1 Stock return of Sonal Mercantile Ltd over the last decade?

Over the last 9 years, the stock has delivered a CAGR of 29.5% based on the current price.

	9Y	5Y	3Y	1Y
Share Price CAGR	29.5%	44.3%	2.9%	-3.9%

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	14.07	13.84	29.12
Price to Book	1.96	2.46	1.11
Price to Sales	3.78	4.04	9.10
EV to EBITDA	12.29	11.53	11.77

Q.3 Valuation ratios of Sonal Mercantile Ltd vs historical and industry averages?

The current Price-to-Book (P/B) ratio of 1.96 is lower than its historical median of 2.46, indicating that the stock is trading below its historical average valuation.

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Check Before You Invest : Sonal Mercantile Ltd

Snapshot

Performance Analysis

Ownership & governance

Peer comparison (industry-wise, mcap)

Profit Metrics

Operating Efficiency

Valuation & price assessment

Check more companies

Check trending companies

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