Emerald Finance (538882)

Score breakdown: P/E: 2/3 · ROCE: 1/2 · Growth: 2/2 · Dividend: 0/1

Key Financials

Strengths

• Profit growth of 61.29% outpaced sales growth of 36.36%, indicating strong operating leverage.
• ROE at 21.11% and ROCE at 18.45% show efficient capital deployment.
• Piotroski F-Score of 7/9 suggests solid financial fundamentals.
• PEG of 0.33 appears inexpensive if the recent growth rate is sustained.
• Latest quarter net profit of ₹4 Cr on sales of ₹8 Cr implies an eye-catching 50% net margin.

Concerns

• P/B of 3.75 is rich for a small NBFC, leaving little margin of safety for value investors.
• Tiny size with ₹212 Cr market cap and ₹8 Cr quarterly sales makes it vulnerable to credit shocks.
• Missing debt/equity and promoter holding data limits balance sheet transparency.
• Dividend yield of 0.24% offers negligible income support while waiting for growth to materialize.

AI Analysis

Let me look at Emerald Finance the way Graham and I would: as a piece of a business, not a ticker symbol. It is a small NBFC with a market cap of ₹212 crore, and the latest quarter shows ₹8 crore in sales and ₹4 crore in net profit. That 50% net margin is striking; I would want to know exactly how durable that profitability is before trusting it. The reported numbers are encouraging: sales rose 36.36% and profit jumped 61.29%, so operating leverage is real. With ROE at 21.11% and ROCE at 18.45%, the company is earning well on capital. A Piotroski F-Score of 7 out of 9 also gives me some comfort that the financial machine is functioning soundly. But I cannot ignore valuation and visibility. At ₹62.91, the stock trades at 16.22 times earnings and 3.75 times book value. Graham always preferred a margin of safety; paying nearly four times book for a tiny NBFC demands flawless execution. The PEG ratio of 0.33 looks cheap only if the 61% profit growth continues. High growth rates at small bases often mean revert. The absence of promoter holding and debt/equity data bothers me. I do not buy businesses I cannot see through. Dividend yield of 0.24% means I am not being paid to wait. The stock has fallen from ₹97 to ₹62.91, which may reflect the market's skepticism. For a value investor, this is a watch list candidate: high return on equity, strong recent growth, but a price that leaves little room for mistakes. I would wait for more disclosure and lower valuation, or a longer track record of this growth.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer