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1. Manufacturer of Power, Distribution & Specialty Transformers and Reactors

transformerindia.com | NSE: TARIL

• TARIL manufactures entire range of transformers viz.

  • Power

  • Distribution

  • Furnace

  • Specialty

  • Rectifier Transformers

  • Shunt Reactors

  • Solar Application Transformers

  • Earthing Transformers

• Product capabilities across 5 kV-1,200 kV and 0.5 MVA-500 MVA

• Serves Utilities, EPC players, Industrials, and Renewable Energy Sectors

• Installed capacity of 75,000 MWA across 3 plants; supported by backward integrated manufacturing facilities in Gujarat

2. FY22–26: PAT CAGR of 109% & Revenue CAGR of 22%

3. FY26: PAT up 26% & Revenue up 25% YoY

4. Q2-27: PAT up 117% & Revenue up 57% YoY

PAT up 26% & Revenue up 26% QoQ

5. H1 FY27: PAT up 39% & Revenue up 30% YoY

6. Business Metrics: Improving Return Ratios

7. Outlook: Revenue growth of 25%

7.1 Management Guidance

• Our performance in Q2 reinforces our confidence in delivering our FY27 guidance, comprising 25% revenue growth, an EBITDA margin of 16%, and a PAT margin of 9% to 10%.

• FY27 Revenue: Yes, I think we are maintaining our, you know, INR3,200 crores, so I think we are good at that

• As of 30th September 2026, our unexecuted order book stood at 7,237 crore, up by 32% year-on-year, providing strong revenue visibility over the medium term. The order book is executable over the next 18 to 24 months.

• We are pretty much sure that we'll reach USD1 billion. It will be late part of FY29 or early 2030.

• So, we are looking at around 200 basis point to 300 basis point margin expansion through this backward integration.

  • But the full effect will seen by FY29

• Guidance for 25% revenue growth for FY27, targeting revenue around ₹3,200 crore.

  • EBITDA margin of ~16% and a PAT margin of 9-10%.

• Targeting USD 1 billion (~₹9,000+ crore) revenue by late FY29 or early FY30.

  • Beyond core power and distribution transformers, reaching this target relies on third-party commercial sales generated by its in-house backward integration units—including bushings, pressboard insulation, CRGO processing, CTC, and tank manufacturing (planned to be one of the largest units in Asia).

• Transformer manufacturing expansion adds 35,000 MVA, taking TARIL’s total capacity to 75,000 MVA, with commercial production commencing around Diwali.

  • Capacity supports an annualized revenue potential of ₹5,000-₹6,000 Cr at an average realization of ~₹7 lakh per MVA.

  • Targeting capacity utilization rate of ~90% across plants.

• Backward Integration & Margin Expansion

  • Dedicated in-house facilities for CTC, pressboard insulation, RIP/OIP bushings, fabrication/tanks, and CRGO.

  • Backward integration initiatives targeted for full commercial commissioning by Q1 FY28.

  • Capacities like CTC will dedicate ~60% to captive consumption with the remaining 40% sold commercially starting Q1 FY28.

  • Expected to unlock 200 to 300 basis points of margin expansion, with full benefits reflecting in financial results by FY28–FY29.

• Free Cash Flow: Capital efficiency gains from tighter inventory management and milestone execution are expected to drive positive free cash flow generation starting late FY27.

• Capex Funding: Current expansions and backward integration projects are fully funded through ~₹121 Cr of unutilized QIP proceeds, leasing arrangements, internal accruals, and existing debt, requiring no further capital raising or equity dilution.

7.2 H1 FY27 Performance vs FY27 Guidance

On-track for delivering FY27 guidance

• Management reaffirmed FY27 guidance

• PAT Margin ahead of 9-10% guidance

Our ongoing transformer manufacturing expansion at Changodar is near completion, with the commercial production expected to commence around Diwali. The additional capacity will further strengthen our capability to execute our growing order book and support the next phase of the revenue growth

8. Valuation Analysis

8.1 Valuation Snapshot – Transformers & Rectifiers India

Current Market Price = ₹303.45| Market Cap = ₹4,615.5 Cr

• Revenue growth of minimum 25% assumed for FY28 given the strong order-book.

• At FY27, FY28 forward earnings valuations look very reasonable

• FY27 guidance is already in the price

• The valuations at $1 billion revenue target look very attractive but that is too far in the future

  • Valuations will start looking attractive from a FY29 perspective as the margin expansion from the backward integrations kick in

• PAT of ₹1,000 Cr+ in FY30 at a conservative multiple of 15× could deliver a 3×+ opportunity in market cap from current levels of ₹4,615.5 Cr of market cap

8.2 Opportunity at Current Valuation

• Valuations are really attractive against the long-term vision of reaching USD 1 Bn in revenue with margin expansion of 200-300 bps

  • The margin expansion is not yet discounted in the price

• Unexecuted order book of ₹7,237 Cr (up 32% YoY) provides revenue visibility up to H1 of FY29.

• Capacity is in place to support growth guidance

• Macro Tailwinds (Power & Grid Super-Cycle)

  • Domestic Grid Expansion: India’s transformer market supported by planned transmission grid investments and a 500 GW renewable energy target by 2030.

  • Emerging High-Demand Segments: Accelerated loads from data centers, railway electrification, EV charging infrastructure, and green hydrogen create persistent, non-cyclical demand.

8.3 Risk at Current Valuation

• Since FY27 is already in the price, the thesis depends on backward Integration delivering margin expansion

  • 200 to 300 bps of EBITDA margin expansion depends heavily on selling component capacities (bushings, pressboard insulation, CTC conductors, tanks, CRGO) to third parties beyond captive use.

  • Commissioning Delays: While commercial commissioning across backward integration units is targeted for Q1 FY28, management has already factored in potential delays of up to one quarter. Stabilization lags or delay in commercial sales starting in FY28–FY29 could defer expected cost savings and top-line scaling.

• While order-book provides support till H1 FY29 any weaking in the macro tailwinds will be a big setback to the entire thesis

Previous coverage of TARIL

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1. Retail Focussed NBFC

piramalfinance.com | NSE: PIRAMALFIN

2. FY22-26: A period of transition

3. FY26: PAT up 210% & Net Interest Income up 32% YoY

4. Q2 FY27: PAT up 67% & Net Interest Income up 35% YoY

PAT up 8% & Net Interest Income up 6% QoQ

• Capital Raise: ₹3,850 Cr capital raise during the quarter (₹2,100 Crore QIP +₹1,750 Cr promoter group warrants).

5. H1 FY27: PAT up 67% & Net Interest Income up 39% YoY

6. Outlook: 25% AUM Growth; 50% PAT growth

6.1 Management Guidance and Outlook

Bottom-line growth driven by improving profitability

• AUM

  • FY27 : 25% AUM growth

  • FY28: targeting ₹1.5 lakh crore

    • long-range blueprint to double AUM every 3 year i.e. 25% CAGR

• FY27 Profit : 50% growth for FY27

• RoAUM:

  • FY27: Annualized exit RoAUM of ~2.5% for Q4 FY27

  • Long-term goal remains >3.0% RoAUM.

• Capital Adequacy

  • A ₹3,850 crore total capital raise (via ₹2,100 crore QIP and ₹1,750 crore promoter warrants), leverage (AUM-to-Equity) stood at 3.6x in Q2 FY27.

  • Leverage to expand toward goal of 4.5-5.0x by March 2028 as AUM scales.

  • Capital Runway at 20.1% — non-dilutive regulatory capital releases over the next 12 to 24 months — has ample capital runway to fund growth for several years.

• Opex Efficiency: 25 bps reduction in opex-to-AUM guidance.

6.2 H1 FY27 Performance vs FY27 Guidance

On track to meet all FY27 targets

• PAT growth of 67% is ahead of 50% growth guidance

  • Required run-rate to achieve FY27 target is high

  • Required quarterly run-rate for PAT the next 3 quarters is ~₹627 Cr vs the ₹545 Cr PAT delivered in Q2 FY27

6. Valuation Analysis

6.1 Valuation Snapshot — Piramal Finance

• Current Market Price — ₹1,950

• Market cap — ₹46,040 Cr

• FY27 PAT = 1.5 X FY26 PAT

• FY28 PAT =2.5% X average(FY26 AUM, FY27 AUM)

• PIRAMALFIN trades at 1.5 P/B (×) on FY27 estimates.

• For a company guiding to deliver 50% PAT growth with ROAUM closer to 2.5% — the P/B multiple provides an opportunity of re-rating closer to 2 P/B (×)

6.2 Opportunity at Current Valuation

• Multiple Re-rating: Opportunity of being re-rated at around 2(×) P/B if FY27 guidance is delivered and PIRAMALFIN shows progress on executing FY28 guidance.

  • As leverage (AUM-to-equity) expands from 3.6x toward 4.5x–5.0x by FY28 end, Return on Equity (RoE) is projected to scale up, which typically supports higher P/BV multiples

• Capital adequacy stands at 20.1%, meaning the FY28 AUM expansion to ₹1.5 lakh crore can be funded organically without equity dilution after the fund raise in Q2

6.3 Risk at Current Valuation

• Execution Risk: PIRAMALFIN is on-track to deliver FY27 guidance. The challenge is to consistently deliver on the FY28 guidance.

• Interest Rate Pressure:

  • RBI’s shift from a neutral stance to calibrated tightening

  • Expected to increase in borrowing costs in H2 FY27.

  • If borrowing costs escalate faster than loan repricing (given a ~1-year lag on PLR adjustments for home loans), net interest margins (NIMs) could face near-term pressure.

• Global headwinds —elevated US and Japanese bond yields, persistent inflation, and high crude oil prices—could raise the overall cost of capital.

• Industry-Wide Over-Leveraging in Gold Loans:

  • Management highlighted that over 35% of borrowers across product categories now hold an active gold loan (up from 20%–25% two years ago).

  • ~₹4.7 lakh crore of gold loan disbursements across the industry in FY26 went to deep delinquent borrowers (90+ DPD).

  • Although Piramal excludes 90+ DPD customers from receiving gold loans, rapid branch expansion (targeting 200 gold branches by March 2027) carries operational and credit risk if broad industry delinquencies rise.

• Emerging credit challenges persist in home loans for IT sector employees in South India.

  • Sequential uptick in 90+ DPD delinquencies was noted in Home Loans (HL), Loan Against Property (LAP), and Used Car loans.

• Credit Cost Risk in Unsecured Scaling: Expanding higher-yielding unsecured loans (salaried personal loans, digital loans, business loans) to 25%–26% of Total AUM raises portfolio yield but increases loss severity if macro or micro-level credit stress develops.

Previous coverage on PIRAMALFIN

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1. NBFC — Supply Chain Financing

sgfinserve.com | NSE: SGFIN

2. FY23-26: PAT CAGR 91% & Net Inerest Income CAGR 81%

FY25: A regulatory pause lending in H1 to comply with Type II NBFC licensing norms muted growth

FY26: Leadership transition (H2) + downward revision in guidance (after Q2 results)

3. FY26: PAT up 58% & Net Interest Income up 44% YoY

4. Q2 FY27: PAT up 106% & Net Interest Income up 109%

PAT up 9% & Net Interest Income up 13% QoQ

4. H1 FY27: PAT up 112% & Net Interest Income up 101%

6. Business Metrics: Strong Return Ratios

Management guidance:

• ROA: 4.5%+ (sustainable)

• ROE: 15% target

7. Outlook: 35% PAT CAGR

• AUM Growth: 25–30% CAGR in AUM

  • 30–35% growth run-rate over forward 12-month periods.

  • Driven by front-loaded growth in Q2 FY27 — loan book could reach ~₹7,000 Cr by the end of FY27

• AUM of ₹10,000-11,000 Cr within the next 2 to 3 years.

• PAT Growth: 30%–35% CAGR (potential for 35%–40% growth).

  • Full-year PAT expected exceed Q1 FY27 guidance of ₹225 Cr

• Return on Assets (RoA): 4.5%+

• Return on Equity (RoE): 15%+ as balance sheet leverage increases.

• Cost-to-Income Ratio: Less than 15%

• Asset Quality & Credit Costs: Nil NPAs through conservative, anchor-led credit underwriting.

• Yield: Blended yield is expected to remain stable at around 13%

  • ~12.5% interest yield and 50–70 bps fee income

• To support accelerated business growth without immediate equity dilution — raising Debt-to-Equity cap from 3x to 4x

  • Asset-to-Equity ratio of up to 4x–5x

• No equity dilution:

  • No equity raising will occur in the current financial year or until the loan book approaches ₹10,000–11,000 Cr.

  • At that stage, will evaluate market valuations or adjust leverage limits accordingly

• Supply chain financing will remain the core — at least two-thirds (~66–70%) of the total loan book over the next 2–3 years.

  • To add 2 new corporate anchors per month over the next 12–18 months

    • Expanding from its current base of 60 brands.

    • Sees room to double wallet share within existing corporate ecosystems from <5% to 10%.

• New Products:

  • Factoring & TReDS: Scaled to ~15% of AUM as of Q2 FY27.

  • Digital Lending: Targeted to scale to ~10% of total AUM as the book approaches ₹10,000 Crore.

  • Loan Against Property (LAP) & Term Loans: Introduced to build longer-tenure assets and improve overall Asset-Liability Management (ALM) stability.

7.1 Q2 FY27 Performance vs FY27 Guidance — SG Finserve

• Debt Leverage Cap Raised 2-3x in Q1 → 3-4x in Q2-27

  • Strong front-loaded growth — Board approved raising Debt-to-Equity cap from 3x to 4x (corresponding to an Asset-to-Equity leverage limit of up to 4x–5x).

  • Allows expanding loan book aggressively without requiring near-term equity dilution.

• FY27 Near-Term AUM Target (₹5,500 Cr → ~₹7,000 Cr)

  • Q1 FY27 Guidance: Exit loan book of ₹5,500 Cr for FY27 — ₹6,000 Crore as somewhat aspirational.

  • Q2 FY27: Reached ₹5,694 Cr by the end of Q2 FY27

    • Expect loan book to reach ~₹7,000 Cr by the end of FY27.

• ₹10,000 Cr AUM target pulled forward (FY30 → 2–3 Years)

  • Q1 FY27: ₹10,000 Crore AUM was projected for FY30 (3 to 4 years away).

  • Q2 FY27: With the revised 4x leverage cap and higher current base — targeting ₹10,000-₹11,000 Crore in AUM within 2-3 years.

• Profitability & Growth Rate Targets Refined

  • Full-Year PAT: Full-year FY27 PAT guidance of ₹225 Cr remains intact, with management indicating they “may end up doing slightly better than that”

• Profitability CAGR:

  • Growth rate expectations for PAT slightly higher to 35–40% CAGR, compared to earlier 30–35% range stated in Q1

  • AUM growth run-rate maintained at 30%–35% CAGR.

8. Valuation Analysis — SG Finserve

8.1 Valuation Snapshot

• Current Price — ₹675

• Market cap — ₹4,447.9 Cr

• Trading at 2.78× its Q2 FY27 Book, the multiple reflects strong market premium given to SG Finserve’s return profile and asset quality

• At ~15× FY27E earnings, SGFIN’s valuation is backed by a projected 30%–35% PAT CAGR.

  • PEG ratio of ~0.6× — earnings growth potential offers strong fundamentally-backed compounding.

• Non-dilutive compounding — no equity dilution will take place loan book reaches ₹10,000–11,000 Cr over the next 2–3 years

For a stock promising 25-30% long-term AUM CAGR and 30-35% PAT CAGR over the long-term with nil NPA the forward valuations of ~2.2× P/B (FY28) provide an opportunity for re-rating of multiples closer to 3× P/B

8.2 Opportunity at Current Valuation

Strong head-room to grow

• Reasonably priced at current valuation — The opportunity comes from earnings compounding, not immediate undervaluation.

• FY27 earnings appear reasonably de-risked. Management has said that the current run-rate gives it clear visibility toward the FY27 target.

  • The company does not require an exceptional acceleration from Q1 levels to meet FY27 guidance.

• Earnings growth if delivered will compress the valuation. This creates an opportunity even without a significant rerating.

  • This shows both the opportunity and the limitation: earnings must continue growing, and the market must retain at least a reasonable premium multiple.

• Growth may be funded without additional equity dilution.

The valuation becomes attractive around FY28–FY29 earnings, but only if execution remains strong.

8.3 Risk at Current Valuation

Future performance already embedded in the price.

• Trade at premium multiples for an NBFC currently generating around 15% RoE.

  • Earnings disappointment can cause a double impact — lower earnings estimate + lower valuation multiple.

• SGFIN already discounts strong FY27 execution + FY28 expectations

  • The current price is therefore not supported by present earnings alone.

  • It depends on the successful delivery of FY27 and FY28 growth.

• The risks are higher than the opportunity for new entrants in the stock

  • Existing holders can hold and ride the momentum.

Previous Coverage of SGFIN

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1. WTicabs — Fleet Solutions for Corporates

wticabs.com | NSE: WTICAB

• 80%, 85% of our business comes from B2B, that means our corporate clients

• The second part of the business is self-drive business, which we have started in Dubai, where we buy cars and give it on self-drive to various customers

• The third part of the business is where we are partnering with Uber to provide Uber Black Fleet

  • We are the largest provider of Uber Black Fleet to Uber, where we buy the cars, then we manage the complete operations and the driver is on our revenue sharing model

2. FY21–26: PAT CAGR 155% & Revenue CAGR 81%

3. FY26: PAT up 26% & Revenue up 51% YoY

PAT margin declined

• Higher depreciation: Substantial investment in owned vehicles — owned fleet increased from 1,226 to 1,932 vehicles

approximately 1000 vehicles are with Uber, 400 vehicles are for self-drive in Dubai, balance around 500 vehicles are with our various corporate accounts

• Interest expenses doubled as borrowings increased to finance fleet expansion

• New vehicles require time for registration, driver deployment and operational stabilization

  • Depreciation and financing costs incurred before vehicles achieve full revenue-generating potential

4. H2 FY26: PAT up 34% & Revenue up 47% YoY

PAT up 40% & Revenue up 18% HoH

5. Business Metrics: Reasonable Return Ratios

6. Outlook: 35-40% Revenue CAGR

6.1 Management Guidance — Wise Travel

WTicabs aims to attain a revenue CAGR of 35–40% through strategic investments, emphasizing Employee Transportation Services, Car Rental Services, & the consolidation of operations in 250+ cities, ultimately establishing a significant global presence.

PAT margin should be around 5% to 7%. And EBITDA -- again, consolidated EBITDA should be somewhere around 20% to 25%.

7. Valuation Analysis

7.1 Valuation Snapshot — Wise Travel

Current Market Price= ₹97; Market Cap = ₹230.97 Cr

• WTICAB has guided for FY27 growth similar to the 35-40% growth with EBITDA margin of 20-22% and PAT margin of 5-7%

  • Assumed conservative 30% growth in FY27 without any margin expansion

  • Assuming FY27 guided margins actually getting delivered in FY28 with 30% growth

Talking about our balance sheet strength, our net worth has increased from INR172 crores to INR201 crores

• Looks cheap at current prices

  • New worth of ₹201 Cr trading at market cap of ₹230.97 Cr implies a P/B of 1.15(×)

  • FY26 sales of ₹826.53 Cr at market cap of ₹230.97 Cr implies a P/S of 0.28(×)

  • FY26 P/E (×) of 7.8 and EV/EBITDA (×) of 3.3

• Cheap forward valuations with FY28 P/E (×) of 6 and EV/EBITDA (×) of 2.6 for a company delivering 35-40% growth

7.2 Opportunity at Current Valuation

• Cheap historical earnings multiple: 7.84(×) FY26 earnings

  • Cheap for 51% revenue growth and 26% PAT growth.

  • Valued at only 0.28x annual revenue.

• Earnings acceleration:

  • Guidance of 30–35% FY27 revenue growth and 5–7% PAT margins.

  • Bottom-line to grow faster than top-line.

• Operating leverage from recently acquired vehicles:

  • As new vehicles mature, higher utilization could increase earnings without a proportionate rise in fixed expenses.

• Improving operating cash generation:

  • Cash flow from operations increased from approximately break-even in FY25 to more than ₹52 Cr in FY26.

  • Cash generation could support expansion and reduce reliance on incremental borrowings.

• Potential valuation re-rating:

  • If WTICAB demonstrates PAT margin recovery and strong cash conversion, markets may assign a higher earnings multiple than the current 7.84x.

7.3 Risk at Current Valuation

• Aggressive profitability guidance: Management expects strong margin expansion with FY27 consolidated EBITDA margins of 20–25% and PAT margin of 5-7%.

  • Such a large margin expansion has not been demonstrated historically

• Potential value-trap risk: If additional capital expenditure and depreciation continue to absorb operating profits as in FY26, WTICAB could remain on a low earnings multiple despite strong revenue growth.

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1. LED display maker + Hearing Aids + Mobile Phones

oseldevices.com | NSE: OSELDEVICE

So, hearing aid is our favorite in terms of profitability, and mobile phone will become favorite in terms of top line. And LED basically will give us the reach that we need in the corporates and other places.

We are licensed to manufacture mobile phones from Philips. And we are doing the end-to-end business of this from manufacture to final retail sales.

2. FY24–26: PAT CAGR 52% & Revenue CAGR 49%

3. FY26: PAT up 46% & Revenue up 57% YoY

4. H2 FY26: PAT up 75% & Revenue up 67% YoY

PAT up 17% & Revenue up 47% HoH

5. Business Metrics: Strong Return Ratios

Strong return ratios — muted as capital increased post IPO

6. Outlook: 50%+ Revenue Growth for FY27

6.1 Management Guidance — OSEL Devices

FY27 guidance. So, as we mentioned basically, we will continue a similar set of growth that we have achieved this year. So, and in fact in both the terms, in terms of EBITDA, in terms of top line, we will be bettering what we have done this year.

We are looking forward to our JNPA SEZ hub with commercialization expected from April 2027. This will significantly expand our exports and OEM capacity from India's business port, with SEZ tax benefit combined with our US FDA registration unlocking the US hearing aid market. We believe the next phase of growth will be both large in scale and higher in quality of hearing.

And in terms of EBITDA margins, we are expecting it to be similar or even better because we are also entering into retail of with SFL acquisition. We are also getting into the retail acquisition -- retail business of hearing aids, which is high-margin business. So, we are expecting both growth and EBITDA margins to get better from here, at least for next four-five years.

H1 FY26:

“The new initiatives are gaining traction, but let us still guide to ~20–25% overall growth.”

H2 FY26:

“FY26 delivered ~57% revenue growth; we believe we can maintain or even improve that growth rate, while margins can also improve.”

OSEL Devices upgraded guidance from a modest 20–25% growth expectation in November 2025 to suggesting ~57%+ growth could continue in FY27, while simultaneously expecting EBITDA margins to remain similar or improve.

7. Valuation Analysis

7.1 Valuation Snapshot — OSEL Devices

Current Market Price= ₹370; Market Cap = ₹655.82 Cr

• OSEL Devices has guided for FY27 growth similar to the 57% growth in FY26

  • We have assumed 50% growth in FY27 with stable margins

• Looks reasonably valued at current prices

• Attractive forward valuations with FY27 P/E (×) of 15 and EV/EBITDA (×) of 9 for a company delivering 50% growth

7.2 Opportunity at Current Valuation

• On FY26 numbers, the valuation is reasonable not cheap.

  • The opportunity depends on how much of FY26’s growth can sustain in FY27

• Management has indicated that FY27 revenue and EBITDA growth could remain at similar levels or improve, supported by:

  • Scaling of Philips mobile phones

  • Start of smartphone shipments

  • Consolidation of SFL’s hearing-aid retail business

  • Continued growth in LED displays

  • Higher exports

• This looks attractive if OSEL can continue growing above 35–40%, because several growth drivers have already moved from plans into execution:

  • Philips mobile volumes have scaled beyond pilot orders

  • Smartphones have been launched

  • SFL brings an existing hearing-aid retail business into FY27

  • Exports have already crossed ₹23 crore

• The earnings mix could also improve:

  • Mobile phones are expected to drive top-line growth

  • Hearing aids remain the higher-margin business

  • SFL’s clinic-led retail model could improve hearing-aid realizations and profitability

• Possibility of two sources of upside:

  • Earnings growth

  • Valuation re-rating, if growth remains strong and execution improves

• The key investment case at ₹370 is that the market may be underpricing FY27 earnings growth.

• If OSEL delivers 40%+ revenue growth while maintaining ~18% EBITDA margins, the current valuation could prove attractive even without assuming any expansion in the valuation multiple.

7.3 Risk at Current Valuation

• OSEL trades at roughly 22.5× FY26 earnings. This valuation is not demanding if FY27 growth remains strong, but it leaves less room for disappointment if execution falls materially below management’s expectations.

• FY27 guidance is now very aggressive. After FY26 revenue growth of 56.9%, management indicated that a similar growth rate could be maintained or even improved, while EBITDA margins could remain similar or improve. If growth moderates to 20–25% instead, the current valuation would look much less attractive.

• Cash-flow conversion remains weak. FY26 operating cash flow was negative despite strong reported profitability, reflecting a large working-capital build. This makes the quality of earnings an important monitorable.

  • Working-capital intensity is rising. The business is carrying significant receivables, inventory and short-term borrowings as it scales. Faster growth could therefore require additional funding rather than automatically translating into free cash flow.

  • This creates a risk that EBITDA growth may not translate proportionately into PAT growth if debt and interest costs continue rising.

• The growing Philips mobile business introduces mix risk. Mobile phones can drive revenue rapidly, but hearing aids remain the structurally higher-margin business. If mobile becomes a much larger share of sales without a corresponding increase in higher-margin hearing-aid retail, consolidated profitability could come under pressure.

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1. World’s 3rd & Asia’s Largest Crane Rental Company

sanghvicranes.com | NSE: SANGHVIMOV

Business Segments

• Crane Hiring & Ancillary Services (Core Business)

  • ~Two-thirds of total operational revenue.

  • Services include heavy-lift crane rentals, equipment mobilization/demobilization, lifting plan engineering, and specialized equipment operation.

• Renewable Energy E&C (Sangreen Future Renewables)

  • ~One-third of total operational revenue.

  • Turnkey Engineering & Construction (E&C) for wind power projects.

  • Its scope ranges from concept to commissioning, including wind turbine component logistics, civil foundation prep, mechanical erection, electrical integration, and commissioning.

• Project EPC & Heavy Logistics

  • Lifting, rigging, and specialized surface transport logistics across major construction and project sites (Sangreen Logistics)

  Expanded beyond India into Saudi Arabia, Qatar, and Botswana

2. FY22–26: PAT CAGR 59% & Revenue CAGR 31%

3. FY26: PAT up 17% & Revenue up 34% YoY

4. Q1 FY27: PAT up 30% & Revenue up 40% YoY

PAT down 5% & Revenue up 9% QoQ

• Contraction in EBITDA margins both sequentially and year-on-year

• Driver of the contraction was in the core crane rental business

  • Expected Credit Loss (ECL) Provisions:

    • Driven by statistical aging of trade receivables in India.

    • Management expects this to rationalize over the course of FY27 as collections improve.

  • Revenue Mix & Cross-Rentals:

    • Incremental client demand was fulfilled by hiring ancillary equipment and cross-renting cranes from third parties rather than deploying fresh CapEx.

    • While dilutive to margins, cross-renting requires zero capital investment, making it accretive to cash flow and Return on Capital Employed (ROCE).

  • One-Time Employee Performance Incentive:

    • One-off reward paid to frontline operators and senior executives to commemorate surpassing the ₹1,000 crore annual revenue in FY26

• Margin contraction was also influenced by the growing share of the Renewables E&C segment (Sangreen Future Renewables):

  • In Q1 FY27 it accounted for 37% of revenue vs 31% in Q1 FY26 due to project execution phasing.

  • Renewables E&C is an asset-light, high-ROCE business operating at segment EBITDA margins of 14%–18%.

  • As this lower-margin, capital-light segment increases its share in the revenue mix, it optically dilutes the group’s blended EBITDA margin while generating incremental absolute EBITDA without straining the balance sheet.

5. Business Metrics: Average Return Ratios

Despite strong revenue growth, ROCE has actually declined from FY24 levels as the SANGHVIMOV invested heavily in new cranes

Management is guiding for marginal improvement in ROCE :

• FY27: 16.25–16.5% → FY28 16.5–17%

6. Outlook: 30% Revenue CAGR for FY26-28

6.1 Management Guidance — Sanghvi Movers

Promising 30%+ revenue CAGR as FY28 revenue grows to ₹1,800-1,900 Cr from ₹1,100 Cr in FY26

We have a secured order book as I mentioned of almost Rs. 1,250 crores, which is fully executable within this financial year, providing strong revenue visibility

Order book increased 19% to ₹1,253 Cr as on 24 Jul'26 from ₹1,053 Cr on 14 May’26

The ₹1,250 Cr order book to be executed in remaining three quarters of FY27 and the Q1-27 revenue of ~₹390 Cr, implies a run rate of ₹1,600 Cr+ (1250+390).

As of Q1 end Sanghvi Movers is running ahead of its revenue guidance of ₹1400-1500 Cr

7. Valuation Analysis

7.1 Valuation Snapshot — Sanghvi Movers

Current Market Price= ₹456.4; Market Cap = ₹3,947.9 Cr

• Sanghvi Movers looks reasonable valued at current valuations with TTM Q1 FY27 P/E (×) of 20 and EV/EBITDA (×) of 10

• The valuation deserves some premium as contribution of E&C is increasing

  • E&C can generate incremental EBITDA without substantial fixed-capital deployment, while also creating demand for Sanghvi’s cranes

  • The lower margin of the E&C business when compared to crane rentals should be seen in the context of lower capital requirements if the E&C business

• However, overall business remains capital intensive

  • Crane rental business needs lots of capital to buy new cranes for them to be rented out to customers

  • Part of FY27/FY28 comes from increasing the capital by buying new cranes rather than extraordinary organic operating leverage.

• For a company delivering 30% revenue CAGR for FY26-28, the forward valuations present an opportunity with FY28 P/E (×) of 12.6 and EV/EBITDA (×) of 6.4

SANGHVIMOV does not need a large re-rating for decent returns if FY27/FY28 guidance is achieved. A re-rating would require evidence that international expansion and renewables are structurally improving returns rather than merely increasing revenue.

7.2 Opportunity at Current Valuation

• Strong outlook for growth till FY28 based on guidance with a possibility to beat guidance for FY27

  • Revenue visibility is strong as the order-book of ~₹1,250 crore has to be executed within FY27

• Saudi Arabia can improve overall margins of the crane rental business.

  • In Q1, utilization was about 86% in both India/Botswana and GCC, but yield was 2.29% versus 4.10%

  • If Sanghvi can deploy more cranes into markets where utilization remains high but yields are substantially better, earnings can grow faster than simply adding cranes in India.

• E&C business (Sangreen) can alter the quality of growth.

  • Core crane business produces high EBITDA margins but consumes significant capital.

  • Sangreen’s business operates at lower margins but is asset-light.

  • It as a high-ROCE business that can scale largely through working capital rather than heavy fixed-capital investment.

  • If renewables become a larger contributor without depressing group returns, the market may view Sanghvi as more than a pure equipment-rental company.

7.3 Risk at Current Valuation

• Large capex can dilute returns if utilization or yields disappoint.

  • Sanghvi has approved ₹652 crore of FY27 capex, with ₹92 crore capitalised in Q1 and roughly ₹560 crore still to be deployed.

  • If new cranes are deployed slowly, projects are delayed, or rental yields weaken valuations will become expensive.

• ROCE is not exceptional.

  • Management is guiding to roughly 16.25–16.5% ROCE in FY27

  • It is respectable, but it does not justify treating Sanghvi like a capital-light compounder. If the business keeps reinvesting heavily while ROCE remains near the mid-teens, earnings can grow without creating equally strong shareholder value.

• Q1 gross debt-to-equity was about 0.54×, against FY27 guidance of 0.72×

  • Higher debt increases sensitivity to project delays, utilization weakness and interest costs.

• EBITDA margin will decline as contribution of E&C increases

  • Markets may not value the company on declining margins without fully distinguishing business mix effects

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Stock Ideas at moneymuscle.in

1. Flexible packaging and solutions

uflexltd.com | NSE: UFLEX

Backward and forward-integrated ecosystem spanning upstream raw materials to downstream consumer-ready packaging:

• Upstream Materials: Production of virgin and recycled PET (rPET) chips — primary raw material for packaging film manufacturing.

• Packaging Films: Manufacturing BOPET, BOPP, CPP, recycled BOPET, metallized, and AlOx-coated packaging films.

• Downstream Packaging Solutions: End-to-end packaging products including flexible laminates, pouches, tubes, Woven Polypropylene (WPP) bags, rice raffia bags, recycled plastic resins (rPET, rMLP), and Aseptic liquid packaging packs.

• Engineering, Holography & Recycling: In-house engineering capabilities, holography, printing cylinders, and circular economy recycling plants processing post-consumer PET bottles and multi-layer plastic (rMLP) waste

2. FY22–26: PAT CAGR -27% & Revenue CAGR 4%

A period of weak performances

3. FY26: PAT up 123% & Revenue up 2% YoY

FY26: Year of recovery — starting of a turnaround?

4. Q1 FY27: PAT up 630% & Revenue up 38% YoY

PAT up 116% & Revenue up 32% QoQ

Q1 PAT is higher than FY26 PAT

Overseas operations drive Q1 FY27 growth and profitability. Margin expansion was driven by operational leverage, stronger realizations, pass-through of higher raw material costs, currency tailwinds and localized sourcing premiums. Overseas operations, particularly in Egypt, Mexico and Nigeria, alongside our India PET chips business served as a key growth driver of our profitability.

5. Business Metrics: Weak Ratios

6. Outlook: 35% Revenue Growth

6.1 Management Guidance — Uflex

• The company expects to perform better in FY27 than FY26, driven by improved utilization of recently commissioned capacities, product mix optimization and additional capacities expected to come online during FY27.

• FY27: we're expecting 35% growth in our top line in this financial year. And similarly, EBITDA also, we'll see the same growth coming up in this financial year as compared to last financial year.

• Outlook upto FY29: you can expect a decent growth, 30% plus in coming year. And same growth will continue in FY28 also because these capex’s, what are coming on a stream, this year where 2 have come on stream, 1 is coming up in the first half. They'll have a decent capacity utilization going forward, so, they'll give a very high margin and revenue in FY28 as well as in FY29. You should look at a longterm perspective till FY29, we are seeing a visible and a very decent growth coming up because all the ingredients of growth are in place now.

7. Valuation Analysis

7.1 Valuation Snapshot — Uflex

Current Market Price= ₹657; Market Cap = ₹4,744 Cr

Assumptions

• FY27

  • 35% growth in Revenue & EBITDA

  • Interest + Depreciation ₹1,500 Cr (Based on management estimates)

• FY28 = 30% growth with stable margins

• Markets are not ready to discount the current and future earnings potential given the weak track-record of FY22-26

  • FY27 P/E (×) of 4 and EV/EBITDA (×) of 5 indicates deep value in Uflex

• Value exists at current and forward valuations

7.2 Opportunity at Current Valuation

• Valuation Compression & Margin of Safety

  • Optically Low Multiples: Stock trades at a deep discount for a business promising 30%+ CAGR for FY27-29

  • FY28–FY29 Growth Compounding: As new capacities reach 60%–100% utilization by FY28–FY29, forward P/E compresses, offering substantial earnings support.

• Transition from Heavy Capex to Asset Sweating

  • Completion of Major Capex: The peak capital expenditure cycle executed over the last 3 years is largely concluding.

  • Minimal Remaining Outlays: Residual capex for major projects is low relative to overall capex

  • Free Cash Flow Acceleration: Cash flows previously absorbed by Capital Work in Progress (CWIP) will now convert into operational cash flows as asset utilization scales up.

• Structural Margin Expansion via Packaging Solutions

  • Capital Allocation Shift: 60-70% of incremental capex toward high-ROE, high-margin Packaging Solutions (Asepto liquid packaging, WPP bags, and PCR/rPET recycling) rather than standard commodity films.

  • Mix Enrichment: Revenue share from Packaging Solutions (36% in FY26) is set to expand significantly. This structural shift anchors full-year normalized EBITDA margins at 14%+.

  • Aseptic Scaling: The 12-billion-pack Egypt Aseptic plant expands total global Asepto capacity to 24 billion packs, ramping from 30% utilization in Year 1 (FY27) to 100% by Year 3 (FY29).

• Global Footprint & Near-Customer Pricing Power

  • Insulation from Supply Bottlenecks:

    • Plants spread across India, Egypt, Mexico, USA, Poland, and Nigeria allow UFlex to follow a “75% near-to-customer” turnover policy, protecting revenues from global shipping and freight disruptions.

    • Localized Sourcing Premiums: Overseas customers are paying regional premiums for assured local supply, enabling UFlex to pass through raw material cost variations smoothly.

7.3 Risk at Current Valuation

• Spread Moderation: Management explicitly warned that Q2 and H2 will see normalisation as film spreads cool down to guided full-year levels of 14%+.

• Raw Material Volatility: Upstream feedstocks (PTA, MEG, Homo Polypropylene, Brent crude) experience high price volatility. If oversupply in commodity BOPET/BOPP films leads to aggressive price cuts in global markets, margins could compress below guided targets.

• Geopolitical Vulnerability:

  • International plants (Egypt, Mexico, Nigeria, USA, Europe, Poland) generate 80% of incremental Q1 revenue and 60%–65% of forward growth.

  • Facilities in Egypt and Dubai are exposed to ongoing conflicts in West Asia, shipping bottlenecks in the Red Sea / Bab-el-Mandeb, and rising freight costs.

• Foreign Exchange Exposure:

  • Earnings across international subsidiaries are subject to currency fluctuations (e.g., Egyptian Pound, Nigerian Naira, Euro, Mexican Peso).

  • Management cautioned that foreign currency gains recorded in single quarters can easily reverse in subsequent periods.

• Execution & Ramp-Up Risks on Greenfield Projects

  • Egypt Aseptic Packaging Plant: Expanding Asepto capacity from 12 billion to 24 billion packs globally depends on the successful commercial execution of the Egypt plant.

    • Utilization projected at ~30% in FY27 and 60%–70% in FY28.

    • Delays in customer off-take, certification, or regional adoption could delay projected EBITDA contributions.

  • Dharwad BOPP Line: Additional capex spending (~₹700 crore) for the Dharwad facility must be absorbed smoothly by domestic market demand in FY28.

• Import Dumping & Regional Competition

  • Domestic Indian Market Constraints: Indian FMCG/packaging market is highly price-sensitive, with lower price realisations than overseas markets.

    • Duty-free imports from countries like Indonesia (under trade agreements) create pricing pressure in domestic liquid packaging and film segments.

  • European Subdued Demand: European operations continue to face low-priced imports from Asian suppliers alongside sluggish CPG consumer spending.

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• NSE not cheap on its own:

  • 42.1× TTM earnings

  • ~2.3% adjusted FY26 FCF yield.

• Cheaper than BSE:

  • 42.1× vs ~49× TTM P/E

  • BSE is growing much faster, so part of that discount is justified.

• Pricier than most global exchanges:

  • CME and ICE trade near 22–23×

  • Other major exchanges generally below NSE’s 42× valuation.

The question: Does NSE’s dominance, margins and network effects justify paying 42× earnings when BSE is growing faster and global peers are cheaper?

Our view: Exceptional business, fair price — not a bargain.

2. NSE IPO Details

Because this is a pure OFS, there is no dilution from new shares, but NSE also receives none of the IPO proceeds.

• Existing shareholders selling 12.64 Cr shares, reduced from the 14.89 Cr shares proposed in the June DRHP.

• Price band ₹1,700–1,785

  • At ₹1,785 — issue is worth ₹22,569 crore

• Minimum investment @ ₹1,785 = ₹14,280 (lot size of 8 shares )

• IPO opens: September 17, 2026

• IPO closes: September 21, 2026

• Market cap at ₹1,785 ~₹4.42 lakh crore

• Listing exchange: BSE

3. NSE Financials: PAT 11% & Revenue 6% CAGR FY24-26

3.1 FY25 Boom, FY26 Reset

• Trading activity weakened across major segments in FY26.

  • Cash-market ADTV fell around 6.6%

  • equity-futures ADTV around 14.2%

  • options-premium ADTV around 7.7%.

• Transaction-charge revenue consequently declined.

• This fits the broader slowdown after regulatory measures tightened India’s derivatives market.

Reported EBITDA includes income beyond the core exchange operation, while NSE’s normalized operating measure adjusts for items including associate gains and regulatory costs. We therefore use reported EBITDA for historical performance and normalized operating margins as a check on underlying profitability.

3.2 Is NSE’s Earnings Slowdown Reversing?

Q2 FY26 was the trough.

PAT has since recovered from ₹2,098 Cr to ₹3,120 Cr

In Q1 FY27, revenue from operations grew 13.1% YoY to ₹4,560 crore, operating EBITDA grew 15%, and PAT increased 6.7% to ₹3,120 crore. EPS rose from ₹11.81 to ₹12.61.

That’s encouraging, but Q1 revenue was still below Q4 FY26.

The trend is best described as:

FY25 boom → FY26 slowdown → early FY27 recovery.

4. Absolute Valuation:

All valuation calculations below use the ₹1,785 upper end of the IPO price band.

4.1 Is a PE of 42× Earnings Too Much?

• NSE’s Q1 FY27 TTM P/E = 42.1×

  • That is clearly a premium valuation.

  • Lower end of price band at ₹1,700 still implies ~40× TTM earnings.

  • There is no obvious margin of safety in the short term from P/E.

• NSE’s FY27E P/E = 35×

  • Annualized Q1 FY27 EPS = ₹12.61*4 = ₹50.44

  • That is more reasonable, but still not obviously cheap.

4.2 What Does Free Cash Flow Say?

For NSE, reported operating cash flow is distorted by large movements in clearing-member margins and settlement obligations.

So conventional CFO minus capex overstates shareholder-available free cash flow.

A more useful analytical proxy is:

PAT + depreciation & amortisation − regular capex

For FY26:

₹10,302 Cr PAT + ₹624 Cr D&A − ₹587 Cr capex = ~₹10,339 Crore

That implies:

Adjusted FCF yield ≈ 2.34%

and:

Price / adjusted FCF ≈ 42.7×

Including the ₹926 crore MMRDA land advance lowers the FCF yield to roughly 2.1%, but that isn’t recurring capex.

The takeaway is straightforward:

FCF doesn’t reveal hidden cheapness. NSE is valued at roughly 42–43× both earnings and adjusted FCF.

4.3 How are Forward Valuations Looking for NSE?

If NSE sustains its Q1 FY27 EPS of ₹12.61 through the year, FY27 EPS would be around ₹50.44.

That would mean roughly:

21% EPS growth over FY26

and:

35.4× earnings at ₹1,785

A 35× P/E can be reasonable for a high-quality market leader growing earnings at 20%+.

But there is a catch.

FY27 is a recovery year off a weaker FY26 base.

Sustaining 20%+ EPS growth every year through FY30 would be a much harder ask.

And because NSE already commands a premium valuation, there may be limited room for further P/E expansion.

The investment case therefore depends increasingly on earnings growth rather than re-rating.

If earnings growth slows after FY27 while the P/E compresses, much of the operating growth may not translate into shareholder returns.

Investors buying NSE are therefore betting on both continued earnings growth and continued premium valuation.

5. Relative Valuation: NSE vs BSE

BSE is the most relevant Indian peer for NSE

• BSE has more listed companies and a stronger SME IPO count.

• But NSE is larger where trading liquidity and monetisation matter.

• Its cash-market ADTV is more than 13× BSE’s, revenue is around 3.4× larger, and passive assets linked to NSE indices are more than three times BSE’s.

• NSE is the dominant incumbent.

• BSE is the faster-growing challenger.

• That distinction explains much of the valuation gap.

The large FY26 valuation discount narrows on FY27 earnings.

NSE gives investors greater scale and dominance.

BSE gives investors much faster current growth.

On forward earnings, investors may be paying fairly similar multiples for those two different profiles.

6. NSE vs Global Exchange Valuations

Global exchanges aren’t perfect peers.

Companies such as Nasdaq and LSEG have larger data, technology and index businesses, while mature markets have very different growth profiles. NSE’s DRHP itself warns that global exchange comparisons aren’t directly like-for-like.

Still, they are useful as a valuation reality check against NSE at 42.1×

Approximate TTM P/E as of early September 2026:

• Singapore Exchange~38×

• LSEG~32×

• Nasdaq~27×

• CME~23×

• Cboe~23×

• ICE~22×

NSE therefore trades at a premium to almost every major global exchange operator.

That premium may be justified by India’s faster capital-market growth, NSE’s dominant market share and unusually high profitability.

But it reinforces one point:

42× is a premium exchange valuation.

BSE makes NSE look cheaper.

Global peers make NSE look expensive.

7. NSE IPO: Is ₹1,785 a Fair Price?

The answer depends on what you compare it with.

• TTM P/E of 42.1× — Not cheap

• Adjusted FCF yield ~2.3% — Not cheap

• NSE vs BSE FY26 — Looks attractive

• NSE vs BSE TTM — Moderately attractive

• NSE vs BSE FY27E — Little valuation advantage

• NSE vs global exchanges — Expensive

So we wouldn’t call NSE undervalued.

But neither does ₹1,785 look unreasonable for a franchise of this quality.

The main risk is multiple compression: NSE’s earnings may grow, but if the P/E falls at the same time, much of that growth may not translate into shareholder returns.

8. Our View:

NSE is an exceptional business at a fair price — not a bargain.

At ₹1,785, there is more value on a relative basis than on an absolute basis, but even that relative advantage becomes less compelling once BSE’s faster growth and global exchange valuations are considered.

Don’t subscribe simply because it is NSE.

A great company bought at the wrong price can still be a mediocre investment.

At ₹1,785, NSE looks fairly priced for its quality—not obviously mispriced in your favour.

For eligible employees, the ₹170 discount improves the equation materially. At an effective price of ₹1,615, NSE trades at approximately 38.1× TTM earnings, giving employees a much better starting valuation.

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TL;DR

• Overall Ranking: Mahabank #1, Indian Bank #2, IOB #3, Canara #4, SBI #5

• Growth: Mahabank remains strongest; Indian Bank is the most balanced. Central Bank is the fastest lender. Union Bank still has a deposit-growth problem

• Profitability: Mahabank leads. IOB and Indian Bank remain strong. Bank of India and Union Bank improved the most

• Asset Quality: IOB remains best. Mahabank and Indian Bank have the cleanest net books. Bank of Baroda weakened

• Capital: Sector-wide capital is comfortable. IOB and Mahabank combine strong capital with strong returns

• Valuation: Mahabank still offers the best premium-quality value. Bank of India and Canara look most attractive on re-rating/value.

• Before buying: Check ROA, deposit vs loan growth, and valuation vs fundamentals.

1. Business Growth

The Q1 FY27 data shows four clear patterns:

• Mahabank remains the strongest growth franchise,

• Indian Bank has the most balanced growth

• Union Bank still has a funding problem.

• IOB continues to grow strongly, while Central Bank has emerged as the fastest lender.

1.1 Mahabank remains the strongest growth franchise

• Advances accelerated from 21.7% in FY26 to 26.9% in Q1 FY27

• CASA remains the highest in the group at 49%

• The change to watch is funding

  • Deposit growth slowed from 14.1% to 12.9%

  • Loans are now growing more than twice as fast as deposits

Mahabank still has a major funding advantage because of its high CASA base. But the widening loan-deposit growth gap needs monitoring.

1.2 Indian Bank has the most balanced growth profile

Indian Bank’s growth is slower than Mahabank or IOB, but the balance is better:

• Advances, Deposits, CASA — All three are growing together

  • CASA growth has accelerated from 10.9% in FY26 to 15.3%, strengthening the funding mix

Indian Bank is growing without creating a visible funding mismatch.

1.3 IOB remains a high-growth bank, but growth has moderated

• IOB was the fastest-growing bank at FY26. Though FY26 growth has slowed, Q1 remains strong:

IOB’s growth remains strong. The pace of improvement in its funding base has slowed.

1.4 Central Bank has become the fastest lender in the group

• Advances growth accelerated from 18.8% in FY26 to 28.6% in Q1 FY27

• The bank also retains a strong 46.6% CASA ratio, second only to Mahabank

• Deposit growth, however, is much lower at 11.7%

• It has one of the widest gaps between loan and deposit growth

The balance sheet is growing rapidly. The next question is whether that growth is producing adequate profitability.

1.5 Union Bank’s deposit problem remains unresolved

At FY26, Union Bank was already the main concern in this section: deposits grew only 2.7% against 9.7% advances growth. In Q1 FY27 the mismatch has widened as Advances grew 12.5% while Deposits lagged at 3.5%

CASA growth is the positive: it improved sharply from 1.7% to 11.7%.

So the composition of deposits is improving, but the overall deposit base is still not growing fast enough.

Union Bank remains the weakest funding story in the group.

1.6 Bank of Baroda is less conservative than at FY26

At FY26, Bank of Baroda grew deposits 16.2% against only 12% advances growth — a deliberately conservative funding position. Q1 reverses that:

• Advances: 17.4%

• Deposits: 13.8%

• CASA ratio: 37.7%

The balance sheet remains reasonably balanced, but the funding cushion has narrowed.

Bank of Baroda remains balanced but is no longer deposit-led. Canara’s growth is good, but its funding mix is weaker than peers.

1.7 Canara stands out with a weak CASA base

Its weakness is CASA: 29.7%, the lowest in the group.

Mahabank remains the strongest growth franchise, although its loan-deposit growth gap has widened. Indian Bank has the most balanced growth profile. IOB continues to grow strongly but has slowed from FY26. Central Bank has become the fastest lender, backed by a strong CASA franchise but much slower deposit growth. Union Bank remains the main funding concern.

2. Profitability — Who Is Actually Earning From Their Growth?

• Q1 FY27 shows a wider profitability gap than FY26.

• Mahabank remains clearly ahead.

• IOB and Indian Bank remain strong.

• Union Bank and Bank of India have improved materially.

• PNB has recovered, but core income growth is still weak.

2.1 Mahabank remains the profitability benchmark

At FY26, Mahabank already led the sector on ROA, ROE and efficiency.

Q1 strengthened that position:

NIM eased from 3.90% to 3.79%, but better efficiency more than offset the pressure.

Mahabank is still the most profitable PSB by a wide margin.

2.2 IOB’s earnings engine has strengthened, but costs are holding it back

• IOB improved across the core return metrics of NII growth, ROA, ROE, NIM

• The weak point is cost-to-income, which rose from 44.9% to 54.0%

• That explains why operating profit grew only 14.2% despite 34% NII growth

The lending business is getting stronger. Operating efficiency now needs to catch up.

2.3 Indian Bank remains the most consistent performer

Indian Bank’s return ratios i.e. ROEA & ROE barely changed:

But earnings momentum improved sharply:

• NII growth: 6.9% → 16.9%

• Operating profit growth: 4.8% → 16.5%

• Cost-to-income improved to 44.8%

Indian Bank was already profitable. Q1 shows the underlying earnings engine accelerating.

2.4 Union Bank and Bank of India are the biggest improvements from FY26

Union Bank had shown de-growth of core income at FY26

• NII: -1.5% → +10.1%

• Operating profit: -7.9% → +15.8%

• ROA: 1.25% → 1.36%

The profitability problem has clearly improved.

Bank of India has also crossed an important threshold:

• ROA: 0.93% → 1.01%

• NII growth: 3.2% → 12.6%

• Operating profit growth: 3.9% → 26.0%

• Cost-to-income: 51.4% → 46.3%

Union Bank has restored earnings momentum. Bank of India has finally crossed 1% ROA.

2.5 PNB recovered — 214% PAT growth overstates improvement

• The important change is not the PAT number

• It is that NII has turned positive and ROA has crossed 1%

• But 2.1% NII growth is still weak

PNB has moved from deterioration to recovery. It has not yet become a strong earnings story.

2.6 UCO Bank, Central Bank and PSB still need better profit conversion.

UCO Bank’s cost-to-income improved sharply to 37.5%, and operating profit grew 79.8% — yet ROA is only 0.68%.

Central Bank grew NII 15.7%, but operating profit fell 5.1%. Cost-to-income remains high at 55.4%.

PSB grew NII 15.3%, but operating profit increased just 0.9%. Cost-to-income is still 60.2%, the worst in the group.

All three are generating more income. They are not yet converting enough of it into acceptable returns.

2.7. Bank of Baroda still lacks a clear operating recovery

Its reported ROA, ROE and PAT are distorted by an exceptional item, so those headline numbers are not useful for peer comparison.

The cleaner operating numbers are:

• NII growth: 9.5%

• Operating profit growth: -1.3%

• Fee income growth: -20.4%

That is not yet an earnings recovery.

Bank of Baroda remains profitable at the franchise level, but Q1 operating momentum is weak.

Mahabank remains the clear profitability leader. IOB and Indian Bank continue to produce strong returns, although IOB’s higher costs need attention. Union Bank and Bank of India show the biggest improvement from FY26. PNB has crossed 1% ROA, but core-income growth remains weak. Canara enters with good return ratios but little profit acceleration. UCO Bank, Central Bank and PSB still need to convert income growth into stronger ROA.

3. Asset Quality — Whose Clean Books Are Real?

• Q1 FY27 broadly strengthens the sector’s asset-quality picture.

• IOB remains the standout. Mahabank and Indian Bank still have the cleanest net books

• Central Bank and Bank of India improved sharply. PSB remains the weakest residual book, while Bank of Baroda moved in the wrong direction.

3.1 IOB remains the asset-quality leader

At FY26, IOB already had the lowest GNPA and near-zero slippage.

Q1 improved further — This is important because advances are still growing 22.75%.

IOB is sustaining high loan growth without creating fresh stress.

3.2 Mahabank and Indian Bank still have the cleanest net books

• Their NNPA ratios are almost unchanged

• Both also maintain PCR above 98%

• The legacy bad-loan risk is therefore almost fully provided for.

On residual credit risk, these remain the two cleanest books in the sector.

3.3 Mahabank’s slippage remains its one asset-quality weakness.

• In FY26, Mahabank’s 1.25% slippage was the highest in the group

  • Q1: 1.23% — Almost no change

  • Credit cost is also high at 0.99%.

That is not a balance-sheet problem today — NNPA is only 0.13% because the bank is provisioning aggressively.

But with advances growing 26.9%, fresh stress needs to come down.

The book is clean. The flow of new stress is still too high.

3.4 Central Bank and Bank of India show the biggest improvement

• Central Bank’s slippage fell from 1.16% to 0.29%.

  • That is particularly important because advances are now growing 28.6%, the fastest in the group.

• Bank of India also improved sharply:

  • GNPA: 1.98% → 1.81%

  • NNPA: 0.56% → 0.51%

  • Slippage: 0.83% → 0.24%

  • Credit cost: 0.48% → 0.15%

Both banks are growing faster without a corresponding rise in fresh stress.

2.5 PSB is improving, but still has the weakest residual book.

• In FY26, PSB had the highest NNPA and lowest PCR in the group.

• Q1 is better:

• But NNPA is still the highest in the group.

The direction has improved. The cleanup is not complete.

6. Bank of Baroda is the main negative change

• GNPA, NNPA, Slippage numbers in Q1 FY27 have shown clear signs of weakening all the the three metrics

• PCR also slipped slightly to 93.28%

• One quarter is not enough to establish a trend, but the direction is weaker than most peers.

Bank of Baroda is the asset-quality name that needs closer monitoring after Q1.

2.7 PNB and UCO Bank continue to clean up legacy stress

PNB still has the highest GNPA at 2.78%, but NNPA is only 0.28% and PCR is 97.23%.

UCO Bank shows a similar pattern with GNPA at 2.08% but NNPA is only 0.25% with PCR: at 97.85%

Both still carry large gross NPA books, but most of the shareholder risk has already been provisioned.

The headline GNPA looks worse than the residual exposure.

Asset Quality Matrix

• Best overall: IOB

• Cleanest net books: Mahabank, Indian Bank

• Biggest improvement: Central Bank, Bank of India

• Legacy stress largely covered: PNB, UCO Bank, Union Bank

• Needs monitoring: Bank of Baroda

• Weakest residual book: PSB

IOB remains the asset-quality standout: 22.75% loan growth with just 0.06% slippage. Mahabank and Indian Bank still have the cleanest net books, although Mahabank’s 1.23% slippage remains its main weakness. Central Bank and Bank of India show the strongest improvement from FY26. PSB is improving but still carries the highest residual NPA risk. Bank of Baroda is the one bank where Q1 asset-quality trends weakened.

4. Capital Adequacy — Who Has the Firepower to Keep Growing?

• Capital remains a strength across the sector.

• Every bank has a CRAR above 15%

• Most of the faster-growing banks still have substantial buffers.

The question is whether that capital is being deployed at attractive returns.

4.1 IOB still has the strongest capital-growth combination.

At FY26, IOB led the group with 19.78% CRAR while growing advances above 24%.

Capital has moderated slightly as the bank grows, but remains the highest in the group.

IOB has both the capital to grow and the returns to justify deploying it.

4.2 Mahabank funding rapid growth through strong internal earnings

Its capital ratios are not the highest, but its profitability is.

That matters because high ROA and ROE continuously replenish capital even as the loan book expands.

Mahabank’s 27% credit growth is not creating a visible capital constraint.

4.3 BOI and Central Bank have enough capital for their faster growth

• Bank of India now has 18.69% CRAR and 15.97% CET-1, alongside 18.6% advances growth.

  • Combined with the improvement to 1.01% ROA, its capital position strengthens the broader recovery case.

• Central Bank is even more aggressive:

  • Advances growth: 28.6%

  • CET-1: 16.54%

  • CRAR: 18.28%

  • Capital is clearly not limiting Central Bank’s growth.

  • Its constraint remains profitability: ROA is only 1.00% and operating profit declined in Q1.

Both banks have growth headroom. Bank of India is currently converting it into earnings more effectively.

44. SBI remains at the lower end of the capital table, without showing signs of stress

In FY26, SBI had the lowest CRAR at 15.40%, but its large profit engine made the lower buffer manageable.

Q1:

• CET-1: 12.89%

• Tier-1: 13.90%

• CRAR: 15.67%

All three ratios improved while advances grew 18.63%.

SBI still has the least capital headroom in the group, but Q1 gives no indication that capital is restricting growth.

4.5 Bank of Baroda and Canara have less headroom than most peers.

Bank of Baroda’s CRAR improved from 15.82% in FY26 to 16.30% in Q1. At FY26, its relatively low capital buffer was already one of the constraints we highlighted.

Canara enters with:

• CET-1: 12.91%

• Tier-1: 15.00%

• CRAR: 17.17%

Both are adequately capitalised.

But relative to IOB, Mahabank, Bank of India or Union Bank, they have less room to absorb very rapid balance-sheet expansion without stronger internal capital generation.

4.6 UCO Bank still has more capital than it is earning from.

UCO Bank has one of the strongest capital positions:

• CET-1: 17.22%

• CRAR: 19.03%

But:

• ROA: 0.68%

• ROE: 10.17%

This was already the issue at FY26, when high capital ratios sat alongside weak profitability.

The capital is available.

The problem is the return being earned on it.

Capital Strength vs. Capital Efficiency

• Strong capital + strong returns: IOB, Mahabank, Indian Bank, Bank of India

• Strong capital + weaker returns: UCO Bank, PSB, Central Bank

• Lower headroom but adequate: SBI, Bank of Baroda, Canara Bank

Capital is not a constraint for the PSB sector in Q1 FY27. IOB has the strongest combination of capital, growth and returns, while Mahabank’s high profitability allows it to self-fund rapid credit growth. Bank of India has strengthened both capital and profitability. Central Bank has ample capital for its 28.6% loan growth, but still needs better earnings conversion. SBI remains at the lower end of the capital table without showing signs of stress. UCO Bank continues to have the opposite problem: plenty of capital, but insufficient returns on it.

5. Valuation — Where Is the Market Getting It Wrong?

Q1 FY27 creates a clearer split between quality already priced in and improving banks that still trade cheaply.

5.1. Mahabank remains the best premium-quality valuation

• The multiple fell while profitability improved

• IOB trades slightly higher at 2.12x book, despite lower ROA and ROE

• Mahabank still offers the better price-to-quality combination. At FY26 too, this gap versus IOB was one of the main valuation opportunities

5.2 IOB’s premium is more justified than it was at FY26

IOB’s P/B has fallen from 2.39x to 2.12x.

At the same time:

• ROA improved to 1.41%

• ROE improved to 22.69%

• NII growth reached 34.3%

• Slippage fell to 0.06%

So the business improved while the valuation became cheaper.

IOB is still expensive relative to peers, but the premium now has stronger fundamental support.

5.3 Bank of India has become the clearest re-rating candidate

At FY26, Bank of India traded at 0.85x book with 0.93% ROA. We said the key trigger was ROA crossing 1%

Q1:

• P/B: 0.85x

• ROA: 1.01%

• Operating profit growth: 26.0%

• PAT growth: 36.2%

The valuation has not changed.

The fundamentals have.

If ROA stays above 1%, the discount to book becomes increasingly difficult to justify.

5.4 Canara enters as one of the best value-quality combinations

Canara trades at 1.05x book with:

• ROA: 1.04%

• ROE: 18.31%

• Advances growth: 18.0%

• GNPA: 1.57%

The weakness is its low 29.7% CASA ratio and limited operating-profit growth.

But those weaknesses are already reflected in the valuation.

An 18% ROE bank at roughly book value deserves attention.

5.5 Indian Bank remains reasonably priced for its consistency

Indian Bank trades at 1.73x book, slightly below 1.77x at FY26

Meanwhile:

• ROA remains 1.31%

• ROE remains around 19.5%

• NII growth accelerated to 16.9%

• NNPA remains 0.15%

There is no turnaround premium here and no major balance-sheet weakness.

Indian Bank remains one of the easier valuations to justify among the higher-quality PSBs.

5.6 Union Bank and PNB have become more investable as earnings improve

Union Bank trades at 1.16x book.

Its valuation is slightly higher than FY26, but profitability has improved much more:

• ROA: 1.36%

• NII growth: 10.1%

• Operating profit growth: 15.8%

Its main constraint remains weak deposit growth.

PNB trades at 1.08x book.

Unlike FY26, when the recovery was largely being priced before it appeared, Q1 now shows:

• ROA above 1%

• Positive NII growth

• NNPA of 0.28%

Both are now recovery candidates rather than obvious valuation traps

5.7 Central Bank is the cheapest bank — and the fundamentals are improving

P/B has fallen from 0.96x at FY26 to 0.77x.

At the same time:

• ROA improved from 0.89% to 1.00%

• Slippage fell from 1.16% to 0.29%

• Advances growth accelerated to 28.6%

But operating profit still fell 5.1%, and cost-to-income remains 55.4%.

Central Bank is cheap enough to watch closely, but operating leverage still needs to appear before the re-rating case is complete.

5.8 Bank of Baroda, UCO Bank and PSB are cheap for different reasons

Bank of Baroda trades below book at 0.93x, but operating profit declined and asset-quality trends weakened. The catalyst is still missing.

UCO Bank trades at 1.10x, but ROA is only 0.68%.

PSB trades at 1.32x, despite:

• ROA of 0.73%

• ROE of 10.85%

• Cost-to-income of 60.21%

That looks expensive relative to stronger banks available near or below book.

Valuation Scorecard

• Best premium-quality value: Mahabank

• Quality at a reasonable price: Indian Bank, Canara Bank

• Premium justified by growth: IOB, SBI

• Best re-rating candidates: Bank of India, Central Bank

• Recovery candidates: Union Bank, PNB

• Cheap but catalyst missing: Bank of Baroda

• Weak value proposition: UCO Bank, PSB

Mahabank remains the strongest quality-versus-price combination among premium PSBs. IOB’s premium is better supported than at FY26. The biggest valuation change is Bank of India: the stock remains at 0.85x book even after ROA crossed 1%. Canara offers 18% ROE near book value, while Central Bank has become materially cheaper as several operating indicators improve. UCO Bank and PSB remain less attractive because stronger banks are available at similar or lower valuations.

6. The Final Rankings: Public Sector Banks Ranked

The top three remain unchanged from FY26: Mahabank, Indian Bank and IOB.

The main changes are below them. Canara Bank enters at #4. Bank of India moves up after crossing 1% ROA. PNB improves enough to move out of the bottom two. Bank of Baroda slips because operating and asset-quality trends weakened.

The Verdict on Each Public Sector Bank

🥇 Rank 1: Mahabank — Still the Sector Benchmark

Why it ranks here

• Best ROA: 1.90%

• Best ROE: 24.65%

• Best cost-to-income: 35.0%

• Advances growth: 26.9%

• NNPA: 0.13%

The valuation also improved slightly, with P/B falling to about 2.02x despite stronger profitability.

Watch: Slippage remains high at 1.23%.

Bottom line: Best overall combination of growth, profitability, funding quality and valuation.

🥈 Rank 2: Indian Bank — The Most Balanced Compounder

Indian Bank continues to deliver strong returns without taking obvious balance-sheet risks.

• ROA: 1.31%

• ROE: 19.48%

• NII growth: 16.9%

• NNPA: 0.15%

• Advances and deposits both growing around 14%

Watch: Growth is slower than the most aggressive peers.

Bottom line: The cleanest balance between growth, profitability and asset quality.

🥉 Rank 3: IOB — High Growth That Is Still Holding Together

IOB’s main FY26 risk was whether 20%+ loan growth would create bad loans.

So far, it has not.

• Advances growth: 22.75%

• ROA: 1.41%

• ROE: 22.69%

• Slippage: just 0.06%

• CRAR: 19.36%

Watch: Cost-to-income has risen to 53.95%, and valuation remains high at 2.12x book.

Bottom line: Strong growth, strong returns and exceptional asset quality. The premium valuation is the main constraint.

Rank 4: Canara Bank — Strong Value at Around Book

Canara enters the comparison with a good combination of returns and valuation:

• ROA: 1.04%

• ROE: 18.31%

• Advances growth: 18.0%

• P/B: 1.05x

Its weakness is funding: CASA is only 29.7%, the lowest in the group.

Operating profit growth was also weak.

Bottom line: One of the better quality-at-a-reasonable-price options.

Rank 5: SBI — The Anchor

SBI remains one of the most dependable franchises in the group.

• Advances growth: 18.63%

• ROA: 1.11%

• ROE: 17.87%

• GNPA: 1.47%

Capital ratios remain lower than peers, but improved during Q1.

At 1.99x book, valuation is full rather than cheap.

Bottom line: Less re-rating potential than smaller PSBs, but much less dependent on a turnaround.

Rank 6: Bank of India — The FY26 Trigger Has Arrived

At FY26, the trigger was simple: ROA needed to cross 1%.

Q1 ROA is 1.01%.

Other indicators also improved:

• Operating profit growth: 26.0%

• Slippage: 0.24%

• CRAR: 18.69%

• P/B: still only 0.85x

Watch: One quarter above 1% ROA does not yet prove sustainability.

Bottom line: The strongest deep-value re-rating candidate after Q1.

Rank 7: Union Bank — Earnings Fixed, Funding Not Yet

The profitability problem has improved sharply:

• NII growth: 10.1%

• Operating profit growth: 15.8%

• ROA: 1.36%

But deposits grew only 3.5%, versus 12.5% advances growth.

Bottom line: Earnings have recovered. Deposit growth remains the constraint.

Rank 8: PNB — Recovery Is Now Visible

PNB has improved from FY26:

• ROA: 0.89% → 1.04%

• NII: -1.9% → +2.1%

• NNPA: 0.28%

But GNPA remains high at 2.78%, and core-income growth is still weak.

Bottom line: No longer an obvious valuation trap, but the recovery is still early.

Rank 9: Bank of Baroda — Cheap, But Still Waiting for a Turn

At 0.93x book, Bank of Baroda looks inexpensive.

But Q1 operating trends remain weak:

• Operating profit: -1.3%

• Fee income: -20.4%

• GNPA and slippage both increased

Bottom line: The valuation is attractive. The earnings catalyst is not yet visible.

Rank 10: UCO Bank — Better Efficiency, Still Weak Returns

UCO Bank improved cost-to-income dramatically to 37.5% and remains well capitalised.

But:

• ROA: 0.68%

• ROE: 10.17%

The improved operating efficiency has not yet translated into acceptable returns.

Bottom line: Progress is visible, but profitability remains too weak.

Rank 11: Central Bank — Getting Interesting

Central Bank has improved materially:

• ROA: 1.00%

• Slippage: 0.29%

• Advances growth: 28.6%

• P/B: just 0.77x

But cost-to-income remains 55.4%, and operating profit fell 5.1%.

Bottom line: The valuation is compelling, but operating leverage still needs to appear.

Rank 12: PSB — Improving, But Better Alternatives Exist

PSB’s asset quality has improved:

• NNPA: 0.65%

• Slippage: 0.18%

But it still has:

• ROA: 0.73%

• ROE: 10.85%

• Cost-to-income: 60.21%

• P/B: 1.32x

Several stronger banks trade at lower valuations.

Bottom line: Better than FY26, but still the weakest risk-reward in the group.

The top three remain unchanged: Mahabank, Indian Bank and IOB. Canara enters strongly at #4. Bank of India moves up after crossing the 1% ROA threshold. Union Bank and PNB are improving but still have unresolved weaknesses. Central Bank is becoming an interesting re-rating candidate. Bank of Baroda remains cheap without a clear catalyst, while PSB still offers the weakest value relative to peers.

7. Post Q1 FY27 Questions to Ask Before You Buy A Public Sector Bank

The three checks from FY26 still hold. Q1 FY27 simply changes which banks pass them.

7.1 Is ROA above 1% — and can it stay there?

• A 1%+ ROA remains the clearest profitability filter

• Do not pay for a recovery until returns actually improve.

7.2 Are deposits keeping pace with loans?

• Fast loan growth is useful only if the bank can fund it without steadily increasing its funding cost.

• Watch the gap, not just the loan-growth number.

7.3 Does the valuation match the quality?

• Cheap stocks are not automatically good investments. Expensive stocks are not automatically bad ones..

• Buy the gap between price and fundamentals — not the cheapest multiple on the screen.

The framework remains simple: first check whether the bank earns more than 1% ROA, then whether deposits can support its loan growth, and finally whether the market price already assumes too much. Q1 FY27 strengthens Mahabank, Indian Bank and IOB at the top, while Bank of India and Canara Bank stand out on valuation. The weakest combinations remain banks where low returns are not compensated by sufficiently low prices.

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Complete coverage of YATHARTH at moneymuscle.in

1. Super specialty hospital chain

yatharthhospitals.com | NSE: YATHARTH

2. FY22–26: PAT CAGR 40% & Revenue CAGR 32%

3. FY26: PAT up 30% & Revenue up 36% YoY

4. Q1 FY27: PAT up 8% & Revenue up 52% YoY

PAT up 2% & Revenue up 15% QoQ

• EBITDA Margin: Compression of 2% YoY — initial gestation of newly operational units.

  • Adjusting for ramp-up losses at the Model Town and Faridabad Sector 20 hospitals — adjusted EBITDA margin at a healthy 28.1% .

• PAT Margin Compression:

  • Depreciation and amortisation costs up 89.3% YoY

  • Finance costs up 33x YoY

  • Aggressive capital expenditures and capacity additions over the last year.

5. Business Metrics: Weakening Ratios — Impacted by Expansions & Acquisitions

• Yatharth is in a heavy expansion phase.

  • Fixed assets including goodwill increased, borrowings rose and the company has acquired/started multiple hospitals.

• Denominator of ROE/ROCE has increased before the full profit contribution has come through.

• That is not necessarily bad.

  • But it means FY27/FY28 must prove that the capital deployed can earn strong returns.

    ---

6. Outlook: 40% Revenue Growth; Stable Margin

6.1 Outlook for FY27 — Yatharth Hospital

• FY27: I think we have said that last year, we grew 37% Y-o-Y. As you can clearly see this year, we will easily surpass that growth even the EBITDA is concerned. I think the company is on track close to upwards of 24% EBITDA margin for the full FY27 is concerned.

  • ARPOB: I think 9% to 10% is the right estimation to be taken.

• FY28-FY29: I think what we said that this year will definitely be upwards of last year's revenue growth, and I think that also should be sustainable for the upcoming years ahead of that.

• FY29 Margins: Within two years from today, I think new hospitals should be even upwards of 25% of EBITDA margin, somewhere around 27%, just like our existing mature units

6.2 Q1 FY27 Performance vs FY27 Guidance

Revenue, margins In-line, capacity expansion on schedule

if you look at the 5,000-bed capacity, we feel that we would be even reaching it much earlier than the 3-year target announced.

Faridabad, we are glad that it has break even much before our target, but the way breakeven is also with less than 10% government business

As far as Delhi is concerned, we are sticking to our guidance. We expect that hospital to break even around 15 to 17 months. And it will 100%. It's on track as far as that is concerned

7. Valuation Analysis

7.1 Valuation Snapshot — Yatharth Hospital

Current Market Price= ₹969.5; Market Cap = ₹9,296 Cr

Growth Assumptions — Conservative:

• FY27 = 40%

• FY28 onwards = 35%

Margin assumptions — As per management guiding of 24% moving to 25-27% range as newer hospital stabilize

• Fully-priced from a FY27 perspective - no margin of safety if there are in hiccups along the way

• Reasonably priced from a FY28 perspective — limited margin of safety

• Opportunity emerges if FY29 is delivered with the newer hospitals stabilizing

7.2 Opportunity at Current Valuation

• The opportunity is in FY28/FY30 if earnings catch-up if when 5,000-bed plan is executed on-time with efficiency.

• Operating Leverage: As newer assets like Faridabad Sector 20 scale up from their current occupancy (49% in Q1 FY27) toward a mature 70% level, the incremental patients carry very high incremental EBITDA margins

• Doubling of capacity to approximately 5,000 beds within 2.5-3 years is not yet discounted

  • Strong opportunity for those holding YATHARTH to keep riding the momentum as the plan of 5,000 beeds keeps getting executed

• Management is targeting ~5,000 beds over the next 3 years, compared with current operational capacity of around 2,555 beds and announced capacity of ~3,255 beds could create a 2x+ opportunity in YATHARTH

  • 2x beds +

  • improving APROB

  • improving occupancy

  • improving margins — as hospitals mature

  • improving payor mix with reduction of government schemes.

• Self-Funded Expansion — Operating cash funds the next bed till the 5000 beds

  • Cash conversion rate (Operating Cash Flow to EBITDA) of 98% in FY26 (up from 70% in FY25).

  • Funding without Dilution:

    • Capital expenditure of ₹75-80 lakhs per bed for the upcoming 1,800 beds

    • Funded primarily via internal accruals and strong cash flows

    • No active plans for equity fundraising or dilution.

7.3 Risk at Current Valuation

Aster, Advent eye controlling stake in Yatharth Hospital, says report; shares rise 4.5%

However, Yatharth Hospital has denied that it is engaged in any sale discussions

There may be volatility based around the news flow in the near term.

• Margin of safety is limited at current valuations.

  • Big risks for those entering YATHARTH at current levels

  • Delays in expansion could lead to a negative reaction in the stock price

  • The new hospitals are promising, but not fully mature. Delay in break-even can hurt reported margins and market confidence.

• EBITDA Margin Headwinds

  • Newer hospitals integrated at lower initial margin

    • Faridabad Sector 20 only delivers a 4-5% EBITDA margin

    • Model Town is still operating at gestational losses.

  • As older assets mature and scale up, new acquisitions will continuously be added

  • Structurally consolidated group margin 24-25% range.

• PAT Compression from Depreciation & Debt Costs

  • To fund inorganic additions and oncology equipment, the company’s non-cash and financial liabilities have spiked.

  • Projected to stay high at INR 29 crores per quarter.

  • To fund acquisition, debt on the books have risen creating a structural drag on cash earnings.

• Yatharth’s overall government payer mix is still high — 40% in Q1 FY27.

  • Ayushman scheme carries much lower margins

• Oncology Price Capping:

  • Oncology currently contributes 10% of revenue.

  • Pricing caps implemented on certain oncology drugs have already exerted a 20-30% negative pricing impact on those capped treatments within that segment.

• Room Rent Cap Proposals — potential regulatory overhangs.

  • Government/panel recommendations proposing to limit private hospital room charges to 3-star hotel rates.

  • Implementation of standardized pricing grids remains a systemic risk.

• 70% of future beds may come through acquisitions. This leads to

  • Integration risk — acquired hospitals may not ramp as planned.

  • Capital allocation risk — paying too much for assets can depress ROCE.

  • Goodwill risk — goodwill has already increased meaningfully after acquisitions.

  • At high valuation, the market is assuming acquisitions will be disciplined and profitable.

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Complete Coverage of SKYGOLD at moneymuscle.in

1. Manufacturing of Casting Gold Jewelry

skygold.co.in | NSE: SKYGOLD

2. FY22–26: PAT CAGR of 102% & Revenue CAGR of 68%

3. FY26: PAT up 228% & Revenue up 103% YoY

4. Q1 FY27: PAT up 141% & Revenue up 78% YoY

PAT up 16% & Revenue up 5% QoQ

Overall, I can say that we have grown by 7% to 9% in the volumes in this quarter.

5. Business Metrics: Strong Return Ratios

ROCE guidance of 27%+ by FY30

6. Outlook: PAT CAGR of 35% for FY26-30

6.1 Guidance — Sky Gold & Diamonds

• FY27 Guidance:

  • FY27 Revenue projected at ~8,100 crore

  • EBITDA margin expected in the range of ~7.0-7.5%

  • PAT margin guided at 4.5% - 4.75%

  • Focus on capital efficiency, advance gold and margin expansion

  • Key Growth Levers

    • Portfolio strengthened through strategic acquisitions, expanding TAM and product depth

    • Manufacturing footprint expanded to 1,35,000 sq. ft.

    • Opening of Dubai Office

• FY30 Guidance

  • Revenue expected to be ~₹18,000 -19,000 crore

  • PAT margin projected to be ~5.25%+, aggregating to ₹ 945 crores

  • ROCE of 27% +

  • CFO/PAT of ~20% +

  • Net debt positive, driven by improvements in the working capital cycle

  • Advance gold expected to contribute ~30% of volumes by FY30, is 11.5% in FY26

• Key Growth Levers

  • Exports mix to improve

  • Product mix upgraded with higher design complexity and value-added jewellery, supporting differentiation and margin expansion

  • Expansion into emerging categories such as 18kt, 9kt, and diamond-studded jewellery

• Business Quality by FY30

  • Balanced domestic and export revenue mix

  • Improving ROCE, supported by margin expansion and stronger asset turns

  • Strong corporate governance, consistent positive operating cash flows, and a resilient balance sheet

Revenue Guidance

• Targeting a sustainable annual revenue growth of 30% to 35%.

• A Shift in Focus: Management explicitly stated they wish to avoid specific long-term revenue guidance going forward because gold price volatility, which is beyond their control, can make top-line figures a “misnomer”. They prioritize “cash in the bank” over “vanity” top-line numbers.

Volume Guidance

• Moving away from specific volume targets for the same volatility reasons as revenue

• Of the projected 30-35% revenue growth, management expects 27% to 28% to come directly from volume increases.

• Aggressively scaling its “advanced gold” business (where they only record job fees as revenue).

  • Target of reaching 30% by FY30.

Margin Guidance

• PAT Margin Targets:

  • Conservative 5.25% PAT margin by FY30 — 75 bps expansion

• Gross Margin Drivers:

  • Expect expansion of 60 to 90 basis points driven by a better mix of advanced gold and studded jewelry.

6.2 Q1 FY27 Performance vs FY27 Guidance

Ahead of FY27 Revenue Guidance

• confident in our ability to deliver sustainable growth while continuing to improve the quality and profitability of our business.

• We remain firmly on track to achieve our aspiration of INR8,100 crores by FY27 and INR18,000 crores to INR19,000 crores by FY30.

• we have achieved 17% sales on the Advance Gold model, significantly ahead of our expectation of 15% of the Advance Gold model for FY27.

• Our cash flows from operations turned positive at close to INR30 crores in Q1 FY27 compared to negative operating cash flows till the end of '26.

7. Valuation Analysis

7.1 Valuation Snapshot — Sky Gold

Current Market Price= ₹802.1

Market Cap = ₹12,422.4 Cr

• Fully priced on a FY27 basis with 33× P/E and 13× EV/EBIDTA for a stock promising 35% CAGR for FY26-30

• Opportunity to re-rate to to a 25×+ PE based on FY30 EPS.

  • Opportunity to ~2× from current levels

Sky Gold & Diamonds appears cheap on FY30 metrics — with re-rating potential as it delivers on FY30 guidance

8.2 Opportunity at Current Valuation

• Possibility that SKYGOLD will beat FY27 Guidance

• consolidated revenue for Q1 FY27 translates into a revenue run rate of approximately INR8,050 crores, which is already very close to our FY27 revenue guidance of INR8,100 crores.

• So, we follow Q2 is better than Q1, and then Q3 is better. And again, the fourth quarter, March is better than that because Akshaya Tritiya's major delivery goes in March, and Akshaya Tritiya falls approximately between 20 April to 15 May.

• Guidance for FY30 — Opprtunity to ~2× from current levels

  • Multi-year visibility: Guidance for FY30 (though far away) provides a longer term view on the stock

  • Attractive Forward Valuations: The valuations don’t seem to be discounting FY30 guidance

  • Potential for re-rating of multiples based on execution

• Strong Tailwinds for growth for the next 4- 5 years

Currently, only 40% of the sector is organized and 60% of the sector is unorganized on the B2C side. While on the B2B side, only 20% is organized and 80% is unorganized. So, it gives a very big runway for any B2B design-led manufacturer to progress further. And we are in the sweet spot of that growth at this point of time, which we expect that it should continue at least for the next 4- 5 years going forward as well.

8.3 Risk at Current Valuation

• Fully values on FY27 guidance

  • Sky Gold is fully valued on FY27 guidance — limited margin of safety

    • Valuations implicitly assuming that FY27 revenue guidance of ₹8100 Cr will be beaten

  • Margin of safety will start emerging from FY28 as FY27 guidance is delivered

• FY30 target is ambitious

  • Strong upside case, but it depends on multiple things going right at once: exports, advance gold, value-added mix, diamond/studded jewellery, unorganized-market expansion, working-capital discipline, and no major gold-price or credit-cycle shock.

Last coverage of SKYGOLD

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Stock Ideas at moneymuscle.in

1. Meat Retailer + Manufactures Frozen, Ready to Eat/Cook Food

zappfresh.com | BSE - SME: 544568

Revenue Split

2. FY23-26: PAT CAGR of 73% & Revenue CAGR of 58%

3. FY26: PAT up 58% & Revenue up 69% YoY

4. Q1 FY27: Revenue up 58% YoY

Provisional & unaudited business performance update for Q1 FY27

• The Company delivered a strong start to FY27, with Revenue from Operations growing 58% YoY to approximately ₹74 crore.

• Following the successful completion of the Meevaa Foods acquisition in the first week of July 2026, the combined business is operating at an approximate pro-forma quarterly revenue run-rate of ₹85 crore (including Meevaa),

5. Business Metrics: Strong Return Ratios

6. Outlook: FY27 Revenue growth of 70-80%

6.1 Management Guidance – FY27

The Company reiterates its long-term growth roadmap of achieving ₹600 crore in revenue by FY28 with an EBITDA margin of 18–20%

6.2 Q1 FY27 Performance vs FY27 Guidance

• Revenue — Q1 consol run-rate of ₹85 Cr implies annual run-rate of ₹340 Cr

  • Current rate of ~₹340 Cr is slightly below the ₹375+ Cr target based on the 70-80% revenue CAGR

  • Asking rate of ₹95+ Cr for the next 3 quarters will require solid execution

7. Valuation Analysis — DSM Fresh Foods

7.1 Valuation Snapshot

• CMP: ₹72 | Market Cap: ₹160.5 Cr

Cheap Valuations

• Valuations are cheap for a business promising 70-80% growth with margins of 18-20%

• Current valuations are not demanding — provide flexibility to sustain even a 50% growth compared to the 70-80% guidance

• Valuations are built on conservative growth and margin guidance given the limited track record of DSM Fresh foods as a public company

Attractively valued on FY27E and FY28E, provided execution sustains within the guided range with stable margins. Multiples leave room for re-rating at current prices.

7.2 Opportunity at Current Valuation

• Cheap Valuations: FY26 business performance is not discounted in the valuations

• Strong Guidance: ~₹600 Cr Revenue in FY28 is not discounted in the valuations

• Possibility of re-rating:

  • Opportunity of re-rating of multiples at current valuations

  • Strong upside potential if FY27 and FY28 guidance is delivered

• Longer term story

  • Large headroom for growth

  • Relative smaller than Licious, its nearest competitor (targeting Rs 1,800 crore in revenue for FY27)

    • Licious is still not profitable while DSM has a track-record of profitability

    • Deepanshu Manchanda the founder of DSM was a co-founder of Licious

7.3 Risk at Current Valuation

• Execution challenge — Delivering 70-80% revenue CAGR with expanding margins will not be easy

• Quality of earnings — While DSM is profitable and growing its track record in generating cash is weak

  • If Zappfresh continues to scale at the guided 70–80% rate for FY27 without optimizing its receivables, working capital issues will drain cash.

  • Will force DSM to rely on debt to fund operations, which increases interest expenses (which rose from ₹3.84 Cr to ₹6.89 Cr in FY26) will drags down net profits

• Quality of management — Not a seasoned management and needs to be watched cautiously

  • Auditors reported that the company violated Section 185 of the Companies Act, 2013, which strictly regulates or prohibits loans, advances, and guarantees to directors or entities in which directors are interested

  • SEBI Regulation 32 Deviations in IPO Proceeds — Care Ratings Limited (the Monitoring Agency) and the Audit Committee highlighted deviations in spending of IPO funds against the the IPO prospectus objectives

  • One needs to keep a watch — if the management is not seasoned enough to run a public company or is it a management with corporate governance issues

• SME stock + Management issues — Undervaluation in the stock could continue

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Complete Coverage of DEEPINDS at moneymuscle.in

1. Oil & Gas Support Services

deepindustries.com | NSE: DEEPINDS

2. FY22-26: PAT CAGR of 28% & Revenue CAGR of 31%

3. FY26: EBITDA up 61% & Revenue up 55% YoY

4. Q1 FY27: PAT up 44% & Revenue up 40% YoY

EBITDA up 23% & Revenue up 12% QoQ

5. Business Metrics: Strong & Improving Return Ratios

FY25 - excluding the ₹251 crore exceptional loss

6. Outlook: Revenue FY27 PAT growth of 70%

Strong growth visibility supported by order book

6.1 Management Guidance – FY27

the company could even get double in next 3 to 5 years

• FY27

  • Standalone revenue growth of 18-20%

  • Consolidated revenue growth to exceed 25%.

  • PAT of over ₹350 Cr.

• FY28 — PAT of ~₹500 Cr

  • PAT CAGR of 58% for FY26-28

• Consolidated EBITDA Margin: Holding within 43-45% range.

  • Expect margins to improve in FY28 and subsequent years because of higher-margin contributions coming from both PEC and offshore services

• Cash Flow Conversion: Maintain historical 75-80% EBITDA to cash conversion

Vertical & Segment Outlook

• Production Enhancement Contract (PEC):

  • Mori Field Recovery: Production currently running — following a 5-6 month delay in incremental production due to an operational mishap at the Mori-5 well

    • Deploying rigs to restore full operations

    • Incremental production expected to start contributing by September/October 2026

    • Plans to execute a capital expenditure of ~₹150 Cr on this field contract by March 2027

      • In FY28, this single block to deliver revenue exceeding ₹150 Cr

  • Plans to bid for new mature field blocks recently floated by ONGC.

• Offshore Support Services (Dolphin Offshore):

  • Dolphin’s core contract for the DP2 accommodation barge Prabha is guided to continue delivering ₹150 Crore in revenue.

  • Fleet Expansion Strategy: Future capex for fleet additions is committed only after securing firm deployment orders.

  • Plans to add more tugs, barges, and support vessels one by one over the next three to five years.

• Kandla Energy and Chemicals (Backward Integration):

  • Revival of Kandla requires a capex of ₹10-15 Cr (funded entirely without debt).

  • To start contributing later in FY27,

    • Will expand consol operating EBITDA margins by 1-1.5% by producing critical drilling chemicals in-house

    • No further write-offs related to Kandla in FY27

• High-Capacity Drilling Rigs:

  • To bid for higher capacity onshore rigs (2,000 HP and 3,000 HP) within FY27

Capital Expenditure & Balance Sheet Health

• Total Capex: ~₹250-300 Cr (dependent on contract wins)

• Funding and Capital Raising:

  • Rigs and capex to be funded through internal accruals and debt

  • Net debt-free — no equity raising or QIP is planned.

Order Book & Pipeline Visibility

• Order book — ₹3,047 Cr as of Q1FY27 end

• Execution guidance = ~₹800 Cr of contracts during the remainder of FY27

• 60%+ of order book scheduled for execution over the next 2-2.5 years

• Active bidding pipeline ~₹700-₹800 Cr

6.2 Q1FY27 Performance vs Full-Year FY27 Guidance

• Revenue — Q1 growth of 40% ahead of guidance of 25%+ growth

• PAT: Q1 PAT of ₹89 Cr in line with full year PAT target of ~₹350 Cr

• EBITDA Margin — 43.6% in Q1 within the guided range of 43-45%

• Active Bidding Pipeline — ₹700-800 Cr at Q1-27 end vs ₹500-600 Cr at Q4-26 end

7. Valuation Analysis — Deep Industries Ltd

7.1 Valuation Snapshot

• CMP: ₹637 | Market Cap: ₹4,076.80 Cr

Attractive Forward Valuations

• Current valuations are not demanding — provide flexibility to sustain a quarter or two where performance is not as per guidance

• DEEPINDS generated ₹83.16 Cr of free cashflow. It is trading at free cashflow yield of 2.04

• FY27 expected cashflow from operations =75% X FY27 EBITDA = ₹412 Cr

  • Capex= ₹250 Cr

  • Free cashflow = 412-250 = ₹162 Cr

  • DEEPINDS is trading at FY27 free cashflow yield of 4% — making the valuations look reasonable.

• Multiple Contraction on Guidance: Targets of ~₹350 Cr PAT in FY27 and ~₹500 Cr PAT in FY28 (high-margin ONGC mature field contract and offshore accommodation barge scaling) drive multiple contraction

• FY28 DEEPINDS is trading at an forward P/E(×) of 8.9 and EV/EBITDA(×) of 5.8, — attractive valuations for business delivering 2.5 × PAT for FY25-27.

Attractively valued on FY27E and FY28E, provided execution sustains with the guided range with stable margins. Multiples leave room for re-rating if FY27 is delivered.

7.2 Opportunity at Current Valuation

• Strong Guidance: ~₹500 Cr PAT in FY28 is not discounted in the valuations

• Revenue Visibility: FY27 and FY28 projections supported by an order book of ~₹3,000 Cr order book

• Possibility of re-rating: If FY27 and FY28 guidance is delivered

• Longer term story — Doubling in 3-5 years

7.3 Risk at Current Valuation

• Fully Valued at Current valuation — At 20 P/E(×), DEEPINDS is fully valued with limited opportunities in the short-term

  • Opportunities are dependent on delivering FY27 and FY28 guidance

  • If guidance is not delivered at near all time high price — the downside would be deep and immediate

Previous coverage of DEEPINDS

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Stock Ideas at moneymuscle.in

1. 3^rd Party Logistics, Enabling Digital Commerce

shadowfax.in | NSE: SHADOWFAX

• Serves a wide category of enterprise clients including horizontal and vertical ecommerce, quick commerce, food marketplace, and on-demand mobility companies,

• Range of services include express forward parcel, reverse pickups and hand-in-hand exchange, quick commerce and on-demand hyperlocal deliveries

2. FY23-26: Turned profitable — Revenue CAGR of 44%

3. FY26: PAT up 1,639% & Revenue up 69% YoY

4. Q1 FY27: PAT up 716% & Revenue up 65% YoY

PAT up 17% & Revenue up 10% QoQ

This marks the fifth consecutive quarter of 60%-plus revenue growth, with growth and margins now compounding together.

5. Outlook: Growth of 38-40% & margin expansion

5.1 FY27 Guidance

• Revenue Growth: Raised FY27 revenue growth to 38–40%, up from the previously guided 27–30%.

  • Revision driven by forward projections from large enterprise customers and aggressive acquisition in the D2C and SME segments.

• Margin Expansion: Remains consistent with earlier projections of 100–150 basis points (bps) of expansion for FY27.

  • Intends to reinvest excess profits into the business or pass them to customers to further accelerate market share gains.

• Capex Intensity: Capex front-loaded in H1 FY27 to build capacity ahead of the peak festive season.

  • FY27, capex to reduce to 2.5–3.5% of revenue, down from 4.4% in FY26.

• Segment-Specific Targets

  • Prime Large: Reached FY27 target of 10,000 pin codes within Q1

    • Raised the FY27 target to 12,000 pin codes.

    • Expected to scale white goods shipments in Q2 FY27.

  • Quick Commerce (Dark Stores): Ahead of plan to open 100 dark stores in FY27

  • Network Coverage: Aims to reach 17,000 pin codes by FY27 end

    • On track to full national coverage by FY28.

5.2 Long-term Outlook

• Revenue and Market Share Growth

  • Sustainable Growth Pace: At least 25-30% year-on-year.

  • Market Share Drivers: Growth to come from two primary sources:

    • underlying expansion of the 3PL market (50–55%) and aggressive market share gains (40–45%).

    • market share expansion in Express Parcel will continue for at least the next six to eight quarters as the industry consolidates around the two largest players.

• Profitability and Margin Trajectory

  • Near-Term (FY27–FY28): Steady margin improvement of 100-150 basis points annually.

    • Moderate expansion due to investments in “build mode,” including adding physical capacity and new pin codes.

  • Long-Term Post-FY28: Once heavy infrastructure investments saturate, a “rapid expansion” of 200-250 bps annually.

  • Steady-State Goal: Long-term target of steady-state EBITDA margins in the “early teens”.

• Strategic Growth Engines — four key “engines” that will drive growth:

  • D2C and SMEs: High-yield segments (typically 20–25% higher than enterprises) that are growing at a triple-digit year-on-year rate.

  • Prime Large: Expanding delivery for volumetric goods (e.g., appliances, furniture) from 6,000 pin codes to 12,000 pin codes by the end of FY27.

  • Quick Commerce & Dark Stores: Open 100 dark stores to anchor vertical quick commerce,

    • Could eventually comprise 20–25% of the total quick commerce market.

  • National Coverage: On track for full national coverage by FY28.

• Capital Expenditure (Capex) Outlook

  • Long-Term Trend: To settle between 2-2.5% as the network matures

5.3 Q1 FY27 Performance vs FY27 Guidance

Q1 FY27 significantly exceeded the annual guidance

• Revenue Growth: 64.9% growth vs original guidance of 27-30% growth

  • Upgraded the FY27 revenue growth guidance to 38–40%.

  • Hyperlocal: Revenue grew 53% vs projections of 45-50% gorwth.

• Adjusted EBITDA margins: Expanded by ~200 bps YoY

  • Despite expansion in Q1 — maintaining original full-year margin expansion guidance of 100–150 bps.

6. Valuation Analysis — Shadowfax Technologies

6.1 Valuation Snapshot

• Current Market Price — ₹242.8

• Market cap — ₹ 14,233.6 Cr

• On TTM Q1FY27, the stock trades at: 90× P/E, 46× EV/EBITDA

  • That is premium valuation for a logistics company.

• If you are a new entrant into the stock — Opportunity emerges over the longer term

• If you already own the stock — ride the momentum as the growth guidance is delivered

6.2 Opportunities at Current Valuation

Valuation looks expensive, but opportunity if FY27/FY28/FY29 growth comes through.

• Rapid Revenue Acceleration

  • Industry Consolidation: One of only two large 3PL networks of national scale

  • Expects market share expansion to continue for the next 6-8 quarters as volumes consolidate away from smaller, inefficient players.

• Shift to High-Yield Segments

  • D2C and SME (Shadowfax 360): Growing at a triple-digit rate

    • Offers 15–20% (or up to 25%) higher yields compared to large enterprise contracts.

    • Self-serve “Shadowfax 360” platform allows for zero-touch onboarding of thousands of SMEs without increasing headcount.

  • Prime Large (LCV Deliveries): Addresses a large underserved market with higher per-shipment yields and high entry barriers.

    • Upcoming launch of white goods (appliances) in Q2 FY27 is expected to further boost realizations.

• “Category Creation” in Quick Commerce

  • Vertical Quick Commerce: Vertical quick commerce (category-specific specialists) could grow to 20–25% of the total quick commerce market.

  • Dark Store Advantage: Ahead of its plan to open 100 dark stores in FY27, with 47 already live.

    • These stores serve as a strategic moat, allowing fashion and beauty brands to offer 30–45 minute delivery, a segment with higher value per engagement than horizontal fulfillment.

• Margin Expansion and Operating Leverage

  • Steady-State Target: Aiming for EBITDA margins in the “early teens” once major network investments (like the OneNCR sort center) saturate and operating leverage kicks in

• Strategic Acquisitions and Niche Leadership

  • CriticaLog: Acquisition allows Shadowfax to dominate the high-value luxury segment (jewelry, electronics),

    • Will grow faster than the core business over the next 12 months as cross-selling initiatives mature.

  • Network Reach: Shadowfax added 716 new pin codes in Q1 FY27 alone and is on track for full national coverage by FY28, which acts as a structural advantage against newer competitors.

6.3 Risks at Current Valuation

If execution slips, the opportunity disappears.

• Macroeconomic and Cost Volatility

  • Fuel and Labor Shocks: Logistics model is highly sensitive to diesel price hikes and minimum wage increases.

  • Rapid rises in fuel costs can make logistics “expensive for customers” and potentially impact consumption demand.

  • Consumption Sensitivity: The “build mode” strategy relies on the assumption that India’s digital penetration will nearly double by FY30.

    • Any slowdown in underlying consumption demand could lead to underutilized infrastructure — new facilities typically take 6–8 months to reach optimal utilization.

• Execution Risks in High-Yield Segments

  • Operational Complexity of Large Parcels: Management admitted that losses and damages were higher during the initial launch phase

    • Sustaining margins depends on keeping these lost shipment costs (currently 5.5%) under control.

  • Dark Store Model Validation: Management noted that while early results are good, it is “too early to say exactly” what the long-term ROIC will be as the model scales up.

  • CriticaLog Integration: The success of the “Other Logistics” segment depends on a 12-month cycle of brand and platform integration for CriticaLog.

    • High-value shipments have longer sales cycles and require significantly more convincing and trust-building with customers.

• Strategic and Competitive Pressures

  • Pricing Pressure from Anchor Customers: Risk that large marketplace clients may demand better pricing as Shadowfax’s operational leverage and profitability improve.

  • Market Share Stabilization: Current phase of rapid market share gain will stabilize by FY28.

    • Post-FY28, growth is expected to align more closely with the underlying industry growth of 25%–30%,

    • May lead to a normalization of the high growth multiples currently assigned to the stock.

• Capital Intensity and Asset Strategy

  • Asset-Heavy Risk: The strategy of owning “everything under the roof” (sort centers, hubs, dark stores) increases fixed costs.

    • Makes the company more vulnerable to margin compression if volumes do not grow at the guided pace to provide the necessary operating leverage.

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Confused about AUM, ROA and ROE in NBFC’s? Gain clarity now.

1. NBFC — Supply Chain Financing

sgfinserve.com | NSE: SGFIN

Business Mix & Portfolio

• Part of APL Apollo Group (Group’s flagship co., APL Apollo Tubes Limited is India’s largest structured steel manufacturer)

• Supply Chain Financing continues to be the core of our franchise, further strengthened by the commercialization of the Factoring & TReDS business

  • Became one of < 1% of NBFCs offering Factoring & TReDS solutions

2. FY23-26: PAT CAGR 91% & Net Inerest Income CAGR 81%

FY25: A regulatory pause lending in H1 to comply with Type II NBFC licensing norms muted growth

FY26: Leadership transition (H2) + downward revision in guidance (after Q2 results)

3. FY26: PAT up 58% & Net Interest Income up 44% YoY

4. Q1FY27: PAT up 119% & Net Interest Income up 92%

PAT up 27% & Net Interest Income up 31% QoQ

Q1 FY27 was SG Finserve’s strongest quarter so far. :

• Should not extrapolate the 27% sequential profit growth.

• Q1 benefited from the rapid deployment of equity raised around March–April.

  • The objective was to build the loan book early so that the larger earning base contributes throughout FY27.

• Management itself expects future sequential growth to normalise toward a more sustainable level.

  • After normalising for this capital injection, underlying sequential growth may have been closer to 14–15% rather than 27%.

  • 8–10% QoQ profitability growth would be a sustainable target going forward.

5. Business Metrics: Strong Return Ratios

Management guidance:

• ROA: 4.5–5% (sustainable)

• ROE: 14–16% target

6. Outlook: 30-35% PAT CAGR

6.1 Management Guidance and Future Outlook

Over a period of three to four years, we plan to grow our AUM around 25% to 30% growth. However, profitability we are targeting to grow at 30% to 35% CAGR.

GROWTH, RETURNS & ASSET QUALITY

• AUM: 25 - 30% CAGR

• PAT: 30 - 35% CAGR

• RoA: 4.5% - 5.0%

• RoE: 14% - 16%

• Cost/Income: 13% - 17%

• NPAs: NIL

FY27 PAT & Equity: INR300 crores PBT translates to around INR225 crores kind of a PAT. So, it roughly reaches around INR1,700 crores kind of equity base as FY27 closing.

FY30 AUM: we are targeting to reach INR10,000 crores.

• FY27 Management Guidance

  • FY27 closing AUM / Loan Book ~₹5,500 Cr

  • PBT ~₹300 Cr

  • Implied PAT ~₹225 Cr

  • RoA 4.5–5.0%

  • RoE 14–16% trajectory

  • Cost-to-Income13–17%; management intends to stay below ~15%

  • Asset quality — Aspiration to maintain NIL NPA

  • Equity raise — None planned in FY27

  • Expected FY27 closing equity ~₹1,700 Cr

  • Leverage strategy — Gradually move from ~2.2x to ~3x

• FY27 PBT Guidance Looks Conservative

  • Management indicated that ~₹280 Cr annualised PBT is almost a “no-brainer” at the current base

  • Characterised the ₹300 Cr guidance as carrying a conservative cushion — effectively “under-commit and over-deliver.”

• AUM Outlook: ₹5,500 Cr FY27 → ₹10,000 Cr FY30

  • Management acknowledged that current growth velocity is faster than originally expected and said some earlier FY30 objectives could potentially be achieved by FY29.

• No Equity Raise Expected Until Around ₹10,000 Cr AUM

“We don’t plan to raise any equity because we don’t need to raise any equity.”

• Core Growth Strategy: “Deepening + Widening”

  • Deepening means:

    • financing more dealers within existing anchor ecosystems,

    • increasing wallet share,

    • adding products to existing corporates,

    • moving from channel finance into factoring/invoice finance.

  • Widening

    • new corporate anchors,

    • new MSME customers,

    • new geographies,

    • new products,

    • adjacent financial services.

• APL Apollo Dependence Should Continue Falling

  • SG Finserve originally grew largely from the APL Apollo ecosystem.

  • Management now expects roughly:

    • ~1/3 AUM: APL Apollo ecosystem

    • ~1/3: non-APL Apollo working-capital / supply-chain finance

    • ~1/3: businesses beyond traditional supply-chain finance

• Factoring & TReDS — Emerging Second Growth Engine

  • Factoring has only recently been commercialised but is gaining traction.

  • Roughly 5% of current AUM

  • Management expects factoring to become much larger because:

  • very few banks/NBFCs currently offer it,

  • TReDS is gaining acceptance,

  • regulatory support has improved,

  • B2B sectors not suited to traditional dealer financing can use factoring.

  • This is potentially SG Finserve’s most important new growth vertical.

• LAP + Digital Lending Are Next

  • Management specifically identified two potential lending products:

  • Management sees LAP as a natural cross-sell opportunity to existing MSME borrowers.

  • Its existing digital infrastructure and MSME customer base provide the platform to potentially launch digital business lending.

• Insurance Broking — Likely From Q4 FY27 or Later

  • SG Finserve has incorporated SG Insurance Brokers.

  • It will be a fee-based B2B broking/cross-selling business targeted at the company’s existing ecosystem.

  • Possible products include:

    • trade credit insurance,

    • keyman insurance,

    • employee/group health,

    • other MSME/corporate insurance products.

6.2 Q1 FY27 Performance vs FY27 Guidance – SG Finserve

We are on track to maintain our return on asset ranging from 4.5% to 5%, and we have already seen in Q1 that we already achieved 5.1%.

We are on track to grow our return on equity. We have already expanded from 12% in FY26 to 14% in Q1. Our aspiration is to grow from 14% to 16% as we move forward. Our aspiration is to maintain top-notch credit quality.

What is ahead?

• AUM growth: much faster than the 25–30% long-term framework

• Profit growth: far ahead of 30–35% CAGR guidance

• RoA: above upper end

• Cost efficiency: substantially better than guidance

• Asset quality: exactly on target

What is merely on track?

• ₹300 Cr FY27 PBT: Q1 run-rate supports it comfortably

• ₹225 Cr PAT: requires only modest growth from Q1

• ₹5,500 Cr AUM: only ~21% additional growth required from June levels

What still needs improvement?

RoE: 14% is only the lower end of the 14–16% target. The next leg depends on increasing leverage and deploying capital efficiently.

7. Valuation Analysis — SG Finserve

7.1 Valuation Snapshot

• Current Price — ₹703.6

• Market cap — ₹4,636.4 Cr

For a stock promising 25-30% long-term AUM CAGR and 30-35% PAT CAGR over the long-term with nil NPA the forward valuations of ~2.3× P/B (FY28) provide an opportunity for re-rating of multiples closer to 3× P/B

7.2 Opportunity at Current Valuation

Strong head-room to grow

• Not cheap at current valuation — The opportunity comes from earnings compounding, not immediate undervaluation.

• FY27 earnings appear reasonably de-risked. Management has said that the current run-rate gives it clear visibility toward the FY27 target.

  • The company does not require an exceptional acceleration from Q1 levels to meet FY27 guidance.

• Earnings growth if delivered will compress the valuation. This creates an opportunity even without a significant rerating.

  • This shows both the opportunity and the limitation: earnings must continue growing, and the market must retain at least a reasonable premium multiple.

• Growth may be funded without additional equity dilution

  • Management expects to grow to approximately ₹10,000 Cr AUM by FY30 without raising additional equity, supported by:

    • retained earnings,

    • current capital adequacy of around 32%,

    • leverage rising gradually from 2.2× toward 3×,

    • strong internal profitability.

• RoE has room to improve

  • The opportunity is that SG Finserve is currently underleveraged relative to its target structure.

    • If the company can: maintain RoA near 5%, increase leverage toward 3×, keep credit costs negligible

      • RoE could move toward 16% without requiring higher lending yields or materially greater operating risk.

      • This would justify a higher P/B multiple than a conventional NBFC generating only 11–13% RoE.

• New products provide optionality not fully included in forecasts

  • The current profit projections are predominantly based on lending.

  • Additional potential businesses include:

    • LAP cross-selling,

    • digital MSME lending,

    • B2B insurance broking,

    • international supply-chain finance through GIFT City,

    • longer-term AIF and other financial-services opportunities.

    • The formal strategy includes scaling supply-chain finance, deep-tier finance, factoring, invoice finance and TReDS, followed by LAP and digital lending.

    • Insurance broking could also add fee income without requiring lending capital, although management does not expect a meaningful launch before Q4 FY27 and regulatory approvals remain necessary.

At ₹703.60, the market is already paying for:

• high growth,

• 5% RoA,

• negligible credit costs,

• successful execution of the ₹225 Cr FY27 PAT target.

The valuation becomes attractive around FY28–FY29 earnings, but only if execution remains strong.

The opportunity is not that SG Finserve is cheap today. The opportunity is that a high-quality lending franchise may grow earnings fast enough to make today’s valuation look cheap in two to three years.

7.3 Risk at Current Valuation

The biggest risk is not SG Finserve’s current balance sheet—it is the amount of future performance already embedded in the price.

• Trade at premium multiples for an NBFC currently generating around 14% RoE.

  • Earnings disappointment can cause a double impact — lower earnings estimate + lower valuation multiple.

• SGFIN already discounts strong FY27 execution

  • The current price is therefore not supported by present earnings alone.

  • It depends on the successful delivery of FY27 and FY28 growth.

• Nil NPA may not be permanently sustainable

  • Management itself acknowledged that lending accidents and losses may eventually occur, even though the stated aspiration remains nil NPA.

  • Current valuation appears to price in:

    • negligible credit costs,

    • no major borrower failures,

    • continued recoverability,

    • stable supply-chain relationships.

• Funding costs could compress spreads

  • Interest expenses grew faster than interest income during Q1.

  • This risk becomes more relevant as SG Finserve grows beyond its existing group ecosystem and increasingly competes for external borrowers.

• Expansion into LAP and digital lending can change the risk profile

  • Supply-chain finance benefits from:

    • identifiable transaction flows,

    • anchor relationships,

    • shorter duration,

    • high repayment velocity.

  • LAP and digital MSME lending can behave differently

    • They can also dilute the low-credit-cost characteristics of the existing supply-chain franchise.

    • Investors should not automatically assign current nil-NPA record to new products before they are tested.

• Adjacent businesses may distract management. SGFIN is simultaneously exploring:

  • insurance broking,

  • GIFT City,

  • AIF,

  • ARC,

  • LAP,

  • digital lending,

  • broader financial services.

• Management’s 5–10-year vision is to become a comprehensive financial-services provider rather than only an NBFC. This creates optionality, but also the risk of:

  • management bandwidth dilution,

  • premature diversification,

  • regulatory complexity,

  • higher fixed expenses,

  • capital allocation mistakes,

  • entering businesses without an established competitive advantage.

• The risks are higher that opportunity for new entrants in the stock

  • Existing holders can hold and ride the momentum.

Previous Coverage of SGFIN

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1. Retail Focussed NBFC

piramalfinance.com | NSE: PIRAMALFIN

2. FY22-26: A period of transition

3. FY26: PAT up 210% & Net Interest Income up 32% YoY

4. Q1-27: PAT up 67% & Net Interest Income up 43% YoY

PAT down 8% & Net Interest Income up 6% QoQ

• AUM grew by 25%

  • Core growth business—which excludes the discontinued legacy book and now represents 98% of total AUM—increased by 32% year-on-year.

On the overall demand environment, yes, we are seeing strong demand, and that has resulted in a solid 25% growth at the consolidated level
Demand has remained positive across most categories, resulting in broad-based growth.
The first quarter surprised positively. Typically, first-quarter asset quality numbers tend to be weaker, but this year we did not see that seasonality. The numbers were actually quite strong across the board.

With El Nino, we will need to monitor customers whose incomes depend more on agriculture. The rains during the first few days of July have eased some of those concerns, but it is still something to watch.

5. Outlook: 25% AUM Growth; 50% PAT growth

5.1 Management Guidance and Outlook

Bottom-line growth driven by improving profitability

• Confident in achieving its original FY2027 guidance for AUM growth, profit growth, and Return on AUM (ROAUM).

• Aiming for a 2.5% ROAUM by Q4, up from 1.9% in Q1

  • driven by operating leverage as the loan book grows against stabilised baseline staffing costs.

• Retail opex to AUM ratio is expected to improve

  • improvement of 40-50 basis points of value over the next 4-5 quarters.

• Long-term leverage goal (AUM to equity) of 4.5x to 5x

  • enabled by their domestic credit rating upgrade

  • strategic shift towards lower-risk, larger-ticket lending.

• Gold loans network rollout aims to reach 200 branches by the end of March 2027.

  • To shift staffing models to reach 100% branch penetration for personal loans in the next two to three quarters.

• Sourcing from cross-selling unsecured disbursements is expected to materially improve, bringing lower opex and credit costs.

  • Digital loans business will remain agile — prepared to quickly scale down volumes if current historically low risk levels begin to rise.

• Capital Raise and M&A: Approved an enabling resolution to raise up to ₹4,000 Cr to comfortably support growth requirements.

  • Open to inorganic acquisitions if appropriate valuations arise — nothing is currently imminent

5.2 Q1 FY27 Performance vs FY27 Guidance

On-track — Sustained Delivery Required

• AUM growth of 25% — same as guidance

  • Growth in their continuing businesses reached 32% year-on-year in Q1

  • AUM growth has sustained at these levels for several quarters

• PAT growth of 67% is ahead of 50% growth guidance

  • Required run-rate to achieve FY27 target is high

  • Required quarterly run-rate for PAT the next 3 quarters is ~₹600 Cr vs the ₹461 Cr PAT delivered in Q1 FY27

6. Valuation Analysis

6.1 Valuation Snapshot — Piramal Finance

• Current Market Price — ₹2,130

• Market cap — ₹48,513 Cr

• FY27 PAT = 1.5 X FY26 PAT

• FY28 PAT =3% X average(FY26 AUM, FY27 AUM)

• PIRAMALFIN trades at 1.6 P/B (×) on FY27 estimates.

• For a company guiding to deliver 50% PAT growth with ROAUM closer to 2.5% — the P/B multiple provides an opportunity of re-rating closer to 2 P/B (×)

6.2 Opportunity at Current Valuation

• Consistent Growth: Core business delivered a 32% year-on-year AUM growth — driven by 44% year-on-year surge in retail loan disbursements.

  • Demand situation looks strong to the management

• Credit Rating Upgrade Advantage: Domestic rating upgrade to AA+

  • will lower the cost of borrowing — improve margins

  • enable the company to increase its leverage while aggressively targeting larger-ticket, lower-risk borrowers — enable the growth ahead

• “Hidden” Capital Reserve:

  • The balance sheet contains roughly ₹9,000 Cr of embedded regulatory capital via deferred tax assets and legacy investments; this will naturally unlock over time, providing a substantial long-term safety net.

• Flexibility for Expansion:

  • Approved resolution to raise up to ₹4,000 Cr

  • Openness to opportunistic mergers and acquisitions,

  • PIRAMALFIN has the ammunition to sustain its growth into FY28.

• Increased Profitability: RoA improving to 2.5% in FY27 to 3% by FY28 creates the opportunity as bottom-line grows faster than the top-line

• Multiple Re-rating: Opportunity of being re-rated at around 2(×) P/B if FY27 guidance is delivered and PIRAMALFIN shows progress on executing FY28 guidance.

6.3 Risk at Current Valuation

• Early signs of financial stress among salaried IT sector customers, specifically in Southern India.

  • Stress is currently manifesting as higher bounce rates in secured loan products rather than unsecured ones.

• Wholesale lending portfolio (which includes real estate and corporate mid-market lending) is experiencing highly elevated prepayment rates.

  • In Q1, the company received 74% of its disbursed amounts back as repayments — 61% of all contractual repayments due for the entire FY2027 year have already been paid by borrowers.

  • While this indicates robust asset quality and strong borrower cash flows, it acts as a severe headwind to actually growing the wholesale AUM.

• Asset quality in the LAP segment saw a slight sequential deterioration in Q1, going back to Q3 levels.

  • This uptick removed some of the comfort they had built up in the previous quarter, stating that their “seat belts are very much on” regarding LAP asset quality.

• Sluggish organic demand in the small-ticket housing loan segment (under 35 lakhs).

  • Forced to pivot its growth strategy toward larger-ticket sizes and mass-affluent home loans.

• Piramal’s digital lending business—which is primarily embedded finance conducted through fintech partnerships—is highly cyclical and dependent on the overall health and activity of the fintech sector.

  • Portfolio’s risk is currently at historic lows (allowing the company to operate at historically high volumes),

  • Management warned that this is not a “steady as she comes” business.

  • Volumes can move up or down quite meaningfully, and the company is prepared to aggressively cut back on this business if risk metrics begin to tick upward.

• Execution Risk: PIRAMALFIN is on-track to deliver FY27 guidance. The challenge is to consistently deliver on the FY28 guidance.

Previous coverage on PIRAMALFIN

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1. Public Sector Bank

bankofmaharashtra.bank.in | NSE: MAHABANK

Products & Services

2. FY22-26: PAT CAGR of 57% & Net Interest Income CAGR of 23%

3. FY 26: PAT up 27% & Net Interest Income up 17% YoY

4. Q4-26: PAT up 27% & Net Interest Income up 15% YoY

PAT & Net Interest Income flat QoQ

5. Business Metrics: Strong & Improving Ratios

6. Outlook: 15% NII growth

6.1 Management Guidance

Optimistic yet cautious outlook — Emphasizing profitable growth with zero compromise on asset quality rather than mindlessly chasing top-line expansion.

Growth and Profitability Targets

• Loan Growth: Despite 27% year-on-year advances growth in Q1 — not to revise initial full-year loan growth guidance at 18%

  Net Interest Income (NII): Committed to guidance of 15% NII growth.

• Net Interest Margin (NIM):

  • NIM guidance is set at 3.75%, though bank outperformed Q1 with 3.85%

  • Expects yields on advances to potentially go up

    • 53% their loan book is repo-linked and they have recently approved MCLR hikes, both of which will benefit the bank during upcoming interest resets.

Asset Quality and Strict Underwriting

• NPA Guidance: Gross NPA below 2% and Net NPA below 0.25%.

• Credit Cost: below 1%

• Underwriting Benchmarks: Halting lending to individuals with a TransUnion CIBIL score below 681. All recent sanctions strictly within the prime and super-prime categories.

Operational Expansion and Capital Strategy

• Cost-to-Income Ratio: below 40%

• Branch Expansion: Aggressively expand physical footprint by opening 200 new branches annually

• Capital Raising: To fund double-digit credit growth — to raise up to ₹5,000 crores in equity

  • Waiting on government approval

  • Intends to execute this raise at an opportune time during FY27

Deposit Strategy and Outlook

• Resource Mobilization: Structural shift of retail funds from banking deposits to alternative assets like mutual funds and SIPs

  • Avoiding reliance on high-cost bulk deposits.

  • Leaning heavily on refinance options (which carry a blended cost of 6% to 6.5% and have no CRR/SLR requirements) to fund credit growth while protecting profit margins.

Upcoming Catalysts: Maharashtra Debt Waiver Scheme Expects a government agricultural debt waiver scheme to materialize within FY27, which could provide a major boost to the bank.

• Out of an eligible portfolio of ~₹3,500 Cr, the maximum expected haircut to the bank is ~₹450-500 Cr.

• Potential loss is heavily buffered, as the bank already holds ₹1,700 Cr in provisions and has a ₹1,100 Cr technical write-off (TWO) book against these accounts.

• As a result, recoveries from this scheme will incrementally boost operating profits,

• Government’s incentive of ₹50,000 for prompt-paying farmers is expected to bring a significant influx of savings account (CASA) balances into the bank.

7.FY26 Performance vs FY26 Guidance

Q1 FY27 largely outperformed the full-year guidance targets

Slight miss on NII, deposit growth and CASA ratio

Areas of Out-performance (Beating Guidance)

• Advances Growth: Grew by 26.90% vs guidance of 18%.

• Total Business Growth: Grew by 19.10% vs guidance of 16-17%.

• Net Interest Margin (NIM): 3.85% exceeding the guidance of 3.75%

• Return on Assets (ROA): 1.90% beating the targeted 1.80%

• Return on Equity (ROE): 24.65%, well above the target of 20% or more.

• Asset Quality:

  • Gross NPA fell to 1.45% and Net NPA to 0.13%.

  • Both beat the guidance of keeping GNPA below 2% and NNPA below 0.25%

• Efficiency (Cost-to-Income Ratio): 35.04%, vs guidance of below 40%

• Capital Adequacy (CRAR): 18.64%, vs the 18% target

• Provision Coverage Ratio (PCR): 98.55% vs the 98% guidance.

Areas Where Guidance Was Met

• Credit Cost: At 0.99%, line with the guidance of keeping it below 1%.

• RAM vs. Corporate Ratio: At 63:37, in line with guidance of a 60:40 (+/- 2%).

Areas of Slight Underperformance (Missing Guidance)

• Deposit Growth: 12.93% vs the guidance of 14-15%.

  • Attributed to avoiding high-cost bulk deposits and Certificates of Deposit (CDs) to protect margins, opting for cheaper refinance alternatives instead.

• CASA Ratio: 48.51% below the target of ~50%

• Net Interest Income (NII) Growth: Grew by 14.53%, lagging the target of 15%

8. Valuation Analysis

8.1 Valuation Snapshot — Bank of Maharashtra

• Current Market Price — ₹84

• Market cap — ₹64,865.7 Cr

• Not extremely cheap on P/B because the stock already trades around ~2× book, but it is still reasonable on FY27 P/B if the bank can grow deliver on 15% NII growth and profitability supported by

• Valuations are entering Private bank territory.

• MAHABANK is trading at premium valuations compared to other public sector banks.

  • The premium valuations are justified given its preformance relate to its peer

8.2 Opportunity at Current Valuation

NIM’s guidance is conservative — Profitability could surprise

The guidance is conservative on profitability, NIM, ROA, ROE and asset-quality ratios. It is less conservative on deposit growth, CASA retention, fee income growth and slippage control.

Corporate PipelineStrong — providing growth visibility

Undisbursed corporate sanction pipeline of roughly ₹34,500 crore, ensuring high visibility for continued double-digit corporate credit growth.

Upcoming Catalyst: Maharashtra Debt Waiver Scheme A major near-term upside lies in the anticipated Maharashtra state agricultural debt waiver scheme.

• Recoveries from this scheme will directly and incrementally boost operating profits.

• The government scheme also includes a ₹50,000 incentive for prompt-paying farmers, which will be credited directly to their savings accounts. The bank estimates this will bring a massive influx of low-cost CASA (Current Account Savings Account) deposits—calculated at roughly ₹775 crores—into the bank.

8.3 Risk at Current Valuation

Premium Valuations — Similar to top private sector banks
Raises the bar of performance for MAHABANK. Valuations now demand significantly superior performance compare to its public sector peers

Macroeconomic and Geopolitical Headwinds — West Asia crisis is a significant risk.

• Bank took a proactive and prudent step by creating a specific “global geopolitical uncertainties provision” of ₹200 crores in Q4 FY26.

• MAHABANK warned that the fallout of these geopolitical shocks could begin impacting the loan book in subsequent quarters.

The “War for Deposits” and Funding Constraints

• Management acknowledges an “irreversible” structural shift where household savings are moving away from traditional bank deposits into alternative asset classes like mutual funds and SIPs.

• Elevated CD Ratio: Because of this deposit squeeze, the bank’s deposit growth (12.93%) significantly lagged its stellar credit growth (26.90%) in Q1 FY27. This mismatch pushed the Domestic Credit-Deposit (CD) Ratio to an elevated 86.58%.

• Declining CASA Ratio: The bank’s CASA ratio dropped from 52.51% at the end of FY26 to 48.51% in Q1 FY27.

• Reliance on Refinance: To fund loan growth while avoiding expensive bulk deposits, the bank is relying heavily on alternative refinance options (utilizing roughly ₹19,000 crores).

  • If these refinance avenues become more expensive or dry up, the bank could struggle to fund its aggressive credit expansion without sacrificing profit margins.

Pockets of Asset Quality Stress

• Agriculture NPAs: The Gross NPA in the agriculture portfolio remains notably higher than the rest of the book, standing at 7.58% in Q1 FY27.

• MSME & SMA Bumps: In Q1 FY27, Gross NPAs in the micro, small, and medium enterprise (MSME) segments saw a slight quarter-on-quarter increase.

Equity Dilution

• Shareholder approvals to raise up to ₹5,000 crores in equity.

• Impending capital raise leads to near-term equity dilution for existing shareholders.

Guidance execution

Can MAHABANK grow advances at ~18%, maintain CASA near 50%, keep NIM around 3.75%, and still keep slippages below 1%?

That is the core risk investors should track.

Previous coverage of MAHABANK

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Stock Ideas at moneymuscle.in

1. Cables & Conductors + Power EPC Projects

jdcables.in | BSE - SME: 544524

Core business: cables, wires and conductors

In FY26, the business is dominated by cables and wires.

• Cables & Wires~76%

• Aluminium Conductors~24%

JD Cables sells mainly into the power infrastructure ecosystem. Its customer universe includes:

• State electricity boards / DISCOMs

• EPC contractors

• Infrastructure companies

• Utilities

• Industrial customers

• Power transmission and distribution projects

Management said they are majorly supplying to EPC contractors and are also participating directly in government tenders for cable supply.

JD Cables has two operating production facilities with combined installed capacity of around 28,000 km per annum — 6,000 km at Unit I and 22,000 km at Unit II.

New business: EPC / infrastructure projects

JD Cables is expanding beyond manufacturing into EPC.

So JD Cables is becoming:

• Earlier: cable/conductor manufacturer

• Now: cable/conductor manufacturer + EPC/infrastructure contractor

2. FY24-26: PAT up 163% & Revenue up 90% CAGR

3. H2 FY26: PAT up 69% & Revenue up 70% YoY

PAT up 66% & Revenue up 101% HoH

• EBITDA margin fell from H1 FY26 level because of higher other expenses, EPC-related costs, and bulk-supply execution.

  • Other expenses increased because the company started the EPC business and incurred expenditure where bills/invoices were pending.

• Raw material ratio actually improved, so margin pressure was not from raw material

4. FY26: PAT up 44% & Revenue up 46% YoY

5. Business Metrics: Stable Return Ratios

• ROE: still healthy, but no longer extraordinary.

  • Fall is mostly because of IPO-led net-worth expansion.

• ROCE: more important to watch.

  • FY26 ROCE of 23.11% is good, but the decline from 43.84% shows capital efficiency has reduced after expansion.

    • IPO money increased capital employed before full earnings came in.

    • New facility/capex has not yet fully ramped up.

    • Working capital increased due to fast growth and EPC entry.

    • H2 margins declined versus H1, which reduced operating return on capital.

    • EPC business can be more capital-intensive, so ROCE may stay under pressure if execution is not cash-efficient.

6. Outlook: Growing at 50-60%+ CAGR

6.1 FY27 Guidance

• FY27 revenue growth

  • 50–60% revenue growth in FY27.

  • Expect similar 50–60% growth even in FY28

• Core cables & conductors growth

  • Expected to grow 30–40% in FY27.

  • EPC is the accelerator on top.

• EPC revenue

  • Expects minimum ₹200 Cr from EPC in FY27 — can go higher (₹30 Cr in FY26)

• Order book

  • ₹515 Cr / ₹500 Cr+ as of March 2026.

  • Order-book execution timeline is usually around 1.5 years.

• FY27-end order book target — at least ₹700–800 Cr by FY27 end, calling this a conservative expectation.

• Tender pipeline — ₹1,000 Cr+ tenders, across EPC and cables, with outcomes pending.

• Margins — 12–13% EBITDA margin

• EPC margin — Expectation is around 8%, but management said exact margin can be confirmed once project completion advances.

• New products margin:

  • Newer products such as HTLS, AL-59, MVCC and HT cables are expected to have better margins than existing products and management expects these margins to be double digit.

• Capacity ramp-up:

  • Conductor division is ready and awaiting electricity connection; cable division expected to start in the next two months.

  • New unit to operate at a good pace by September and reach 70–80% utilization next year.

• Longer-term capacity ambition

  • Capacity can be expanded 3x–4x within the next two years, depending on order book and demand.

• Capex

  • FY27 capex guidance is around ₹20–30 Cr, depending on order inflow and new-unit ramp-up.

  • Company is also procuring adjacent land near the new factory.

JD cables is growing into a ~₹1,000 Cr revenue company by FY29, driven by three levers:

• Core cables/conductors growing 30–40%

• EPC scaling from ₹30 Cr to ₹200 Cr+

• New Dankuni capacity and new products supporting higher volumes

This is no longer a simple cable/conductor capacity expansion story. FY27 growth now depends heavily on EPC execution, working-capital funding, and tender conversion.

Order book, capacity expansion, and tender pipeline support the growth narrative.

Margins are guided closer to 12–13% EBITDA, not the H1 FY26 level of ~16%; EPC can absorb cash; and management openly accepts that high growth can keep cash flows under pressure.

6.2 FY26 Performance vs FY26 Guidance

FY26 vs guidance: mostly positive, but not perfect.

• Growth and order book: delivered / ahead

• Margins: lower than H1 run-rate

• Capacity expansion: delayed

• EPC entry: stronger than expected

• Cash flow / working capital: watch closely

7. Valuation Analysis — JD Cables

7.1 Valuation Snapshot

• Current Market Price — ₹244.05

• Market cap — ₹ 550.36 Cr

• Assumptions — lower end of the 50-60% growth till FY28

• On FY26 actuals, the stock trades at: 17.4× P/E, 12× EV/EBITDA, 1.5× sales

  That is a fair-to-slightly-rich trailing valuation for a small SME-listed company with rising EPC exposure.

• On FY27 guidance, the valuation falls sharply which makes it attractive.

• On FY28 guidance, it becomes optically cheap at 8.3× P/E, 5.6× EV/EBITDA, 0.7× sales

• It is cheap only if three things happen:

  • Revenue growth actually lands at 50–60%.

  • EBITDA margin stays around 12–13%.

  • EPC growth does not destroy cash flow.

• The biggest risk is working capital + debt + EPC execution.

  • Management has already acknowledged that growth can pressure cash flows, especially because debtor and inventory days rise during rapid expansion.

7.2 Opportunities at Current Valuation

Valuation looks ordinary on FY26, but attractive if FY27/FY28 growth comes through.

• Strong earnings growth can make current valuation look cheap

  • If guidance is delivered the valuations are not demanding for a company growing at 50-60% with revenue scaling to ₹1,000 Cr by FY29.

• Order book gives revenue visibility

  • If execution is smooth, FY27 revenue visibility is stronger than what a normal small manufacturing company would have.

• EPC can create a step-change in scale

  • The biggest upside lever is EPC.

  • The core cables and conductors business can grow 30–40%, while overall revenue growth is expected at 50–60%.

• Capacity expansion supports growth

  • Existing two units were already operating at high utilization: 82.43% at Unit I and 84.56% at Unit II in FY26.

  • Upcoming Unit III with 28,000 km capacity, effectively creating a major capacity expansion runway.

    • New unit to run at a good pace by September and reach 70–80% utilization next year.

  • New capacity comes onstream just as order book and EPC revenue are scaling.

• New products can improve the quality of growth

  • Newer products should have better margins than existing products

  • If growth comes only from lower-margin EPC, valuation may not rerate much.

  • But if new products contribute meaningfully and margins stay healthy, the market can value JD Cables more like a growing cables/conductors platform rather than just a contractor.

8.3 Risks at Current Valuation

If execution slips, the valuation is no longer cheap.

• Growth guidance is aggressive

  • Guiding for 50–60% revenue growth till FY28

  • That is a big ask for a company with a limited track record in public markets

  • If growth comes in at 25–30% instead of 50–60%, the stock can quickly move from “cheap forward valuation” to “fairly valued small-cap.”

• Margin has already softened

  • In the latest call, management accepted that the sustainable margin expectation is now around 12–13% EBITDA, not the earlier H1 FY26 level of ~15–16%.

  • If the market is valuing JD Cables as a high-growth manufacturing company, then margins matter.

  • If EPC becomes a larger part of the mix, the business may grow faster while margins stay lower.

• EPC can grow revenue but hurt cash flow

  • EPC can scale revenue quickly, but it usually brings:

    • execution delays,

    • billing milestones,

    • retention money,

    • receivable build-up,

    • inventory build-up,

    • higher working-capital requirement,

    • lower margin visibility.

  • Management itself acknowledged that growth and EPC can keep cash flow negative, because debtor and inventory days rise in a 50–60% growth phase.

  • So the risk is: PAT grows, but cash does not.

• Debt risk can rise in FY27

  • Management said they may take bank debt to fund working capital and EPC execution if they win more tenders.

  • JD Cables becomes a business where:

    • revenue grows → receivables grow → debt grows → interest cost grows → PAT quality weakens

• New capacity execution risk — new facility important for FY27 growth.

  • The conductor division ready but awaiting electricity connection

  • The cable division expected to start byJul/Aug 26

  • Any delay in can push revenue into later quarters.

  • At this valuation, the market may not tolerate delayed capacity ramp-up.

• Tender conversion is not yet proven at larger scale

  • Management has participated in ₹1,000 Cr+ tenders, but also said conversion ratio is difficult to state because this is a relatively newer area of participation for them.

  • This creates uncertainty while valuation assumes JD Cables winning and executing large orders.

  • If tender wins are delayed or conversion is lower, the forward valuation case weakens.

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1. EV manufacturer/assembler — 2Ws & 3Ws

zelioebikes.com | BSE - SME: 544563

• Core business is low-speed electric scooters

  • Affordable EVs with no licence, no registration, low maintenance and low running cost.

  • Low-speed e-scooters are the main revenue driver;

    • Expanding into high-speed scooters and electric 3-wheelers/e-rickshaws.

• Manufacturing footprint: started with Hisar/Ladwa plant;

  • Expanding through Odisha/Cuttack, Coimbatore and Patan plants to serve East, South and 3W/chassis demand.

• Sells through a dealer network across 25+ states, with management targeting 550+ dealers in FY27.

  • Dealer-led service network supported by company service engineers

  • Spare-parts availability through Zelio Auto Components, its wholly owned subsidiary.

• Business model is profitable growth, not subsidy-led growth

  • Profitable since inception — growth has come without heavy subsidy dependence.

• Strategic focus: become an organized brand in the fragmented low-speed EV segment, increase localization from ~30% toward 80%, and scale nationally while maintaining margins.

2. FY23-26: PAT up 110% & Revenue up 83% CAGR

3. H2 FY26: PAT up 84% & Revenue up 82% YoY

PAT up 39% & Revenue up 31% HoH

4. FY26: PAT up 77% & Revenue up 80% YoY

5. Business Metrics: Stable Return Ratios

• FY26 ROE fell compared with FY25 because IPO equity increased the equity base.

• On an increased capital base FY26 ROCE remained strong at ~28% — business generates attractive operating returns on capital.

6. Outlook: Growing at 75-80%+ CAGR

6.1 FY27 Guidance

• I am committed to sustaining 75% to 80% year-on-year revenue growth as our structural trajectory. Not a one-time event, but a repeatable engine.

• Sustaining 75% to 80% from here on a larger foundation, wider distribution, and a diversified portfolio is a number grounded in real assets, real capacity, and a market opportunity that is still largely untapped.

• This year we will definitely acquire more than 10% share in the market.

  • Within 2 to 3 years, we will acquire more than 20%-30% of the EV market.

• We are launching two high-speed EV models, targeting a 550+ dealer network across 25+ states with focused activation in South India and Northeast.

• FY27; is the first full year of simultaneous East India and South India revenue from Cuttack and Coimbatore.

• We are targeting more than 125,000 units scale for this year.

6.2 FY26 Performance vs FY26 Guidance

FY26 execution was strong vs guidance — financials beat, 2W volume beat, 3W ramp missed.

• Revenue: ₹313.68 Cr vs ₹260-280 Cr guidance — Beat

• Margin: “Constant and same” vs H1 level

  • FY26 EBITDA & PAT margins ahead of H1 FY26 margins

• 2W Units: FY26 target >60,000 vs 70,000+ delivered — Beat

• 3W Units: FY26 target 1,000 units vs 800 units delivered — Miss

7. Valuation Analysis — Zelio E-Mobility

7.1 Valuation Snapshot

• Current Market Price — ₹567.45

• Market cap — ₹ 1,200.16 Cr

• Assumptions

  • 70% growth till FY28

  • FY29 growth of 50% growth is illustrative to show how the numbers will look if 75%+ structural growth plays out

    • Its too early to consider FY29 as part of any investment decision

• FY26 valuation is rich — 38× trailing P/E is acceptable only if FY27–FY28 growth is very strong and margins hold.

• If guidance is met, valuation becomes much more reasonable. The stock moves from expensive on FY26 to fair-to-reasonable on FY27.

• The real investment case is not FY27 alone, but FY27 + FY28 compounding.

7.2 Opportunities at Current Valuation

The opportunity is that the market may still be underestimating the size of the FY28 business if FY27 execution is delivered.

• Valuation compression

  • If FY27 guidance is delivered, the stock becomes ~23–24x FY27E PAT; if FY28 growth remains strong, valuation can look cheap in hindsight.

• Capacity-led growth without immediate large capex pressure

  • Capacity increased from 72,000 units to 240,000 units.

  • FY27 guidance is >125,000 units, which means the company is not yet close to full capacity utilisation.

  • There is visible capacity headroom till FY28 if the structural growth of 75-80% plays out.

• Low-speed EV category leadership

  • Zelio is focused on low-speed EV scooters: no license, no registration, no mandatory insurance, and pricing around ₹50,000–75,000.

  • Management says this segment is 8–10 lakh units annually, around 40–45% of EV 2W volumes, and growing 20–25% per annum.

  • Most EV attention is on Ola, Ather, TVS, Bajaj high-speed scooters. Zelio is playing a different market: Bharat mobility, students, homemakers, senior citizens, gig workers and Tier-2/Tier-3 users.

  • If Zelio becomes the organized leader in low-speed EVs, it can get a premium. The market may value it not as a small assembler, but as a profitable category leader.

• Market-share expansion

  • H1 FY26 call management spoke of 4–5% market share and a 5–6% target.

  • In the FY26 call, tone became more aggressive: FY27 volumes are expected to cross 10% market share, with management talking about 20–30% share over 2–3 years.

• New geography monetisation

  • FY27 is the first year where the company expects simultaneous contribution from:

    • Ladwa / Hisar — North and West India

    • Cuttack / Odisha East and Northeast India

    • Coimbatore / Tamil Nadu South India

    • Patan / Haryana 3W and chassis

  • Cuttack reduces transportation cost and delivery timelines for East/Northeast,

  • Coimbatore opens South India as a dedicated revenue corridor.

• Product-mix expansion

  • Zelio is moving from mostly low-speed 2W into:

    • High-speed EV models — Brand expansion + higher ASP potential

    • 3W / e-rickshaw — Higher ticket size, new dealer category

    • Auto Components Supply-chain control + spare parts availability

  • Management said it is launching two high-speed EV models and scaling the 3W business through the Patan plant.

8.3 Risks at Current Valuation

The risk is that the stock is already pricing in very clean FY27 execution.

• Valuation risk: FY27 has to deliver

  • If FY27 revenue comes below guidance, valuation does not leave much protection.

  • If FY27 lands below ₹500 Cr, the stock remains expensive even after one more year of growth.

• Management has raised the bar sharply

  • Management is now targeting >125,000 units, 550+ dealers, and 75–80% YoY revenue growth as a “structural trajectory.” That is a very high bar after already growing 81.8% in FY26.

  • They have built capacity, but the market will now demand proof of dealer productivity, service quality, working capital control and repeat demand.

• Cash-flow risk: profit did not convert into cash in FY26

  • FY26 consolidated PAT was ₹28.39 Cr, but consolidated operating cash flow was negative ₹11.20 Cr. The drag came mainly from working capital, increases in inventory, short-term loans and advances and other current assets

  • If growth requires continued supplier advances and inventory build-up, accounting profits may keep rising while free cash flow remains weak.

• 3-wheeler ramp risk

  • 3W is being presented as a second growth engine, but actual scale is still low. If 3W ramp is further delayed, FY27/FY28 upside becomes more dependent on low-speed 2W alone.

• Low-speed EV data opacity risk

  • Slow-speed EVs do not appear in Vahan registration data because they do not require registration. Management clarified this when an investor questioned the mismatch between Vahan data and reported sales.

  • investors have limited independent monthly data to verify volumes. This makes trust in management disclosures more important.

• Import/localisation execution risk

  • Management earlier said the company was around 30% localised and wanted to move toward 80% localisation.

  • Localisation can improve margins, but execution is not automatic. Until localisation is proven, Zelio remains exposed to imported components, supply-chain disruption, currency movement and quality consistency.

• Competition risk

  • Management argues that low-speed EV is a large Bharat market and that Zelio can gain share.

  • But the same attractiveness can invite larger OEMs, regional assemblers and aggressive pricing.

  • Management itself discussed the possibility of larger players like Bajaj, Hero and TVS entering if the market becomes big enough.

  • Current margins assume Zelio can grow without heavy discounting. If competition intensifies, the company may have to choose between volume growth and margin protection.

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Stock Ideas at moneymuscle.in

1. Solar EPC + Power T&D Infrastructure

sugslloyds.com | BSE - SME: 544501

2. FY23-26: PAT up 132% & Revenue up 103% CAGR

3. H2 FY26: PAT up 69% & Revenue up 58% YoY

PAT up 44% & Revenue up 45% HoH

H2 revenue was strong, but H2 core EBITDA margin was softer than H1. Management attributed Q4 margin pressure partly to a shifted MAHAGENCO project and extra costs due to local/land-related issues.

4. FY26: PAT up 20% & Revenue up 27% YoY

We have overachieved our guidance for financial year ‘26, delivering a turnover of INR300 crores against our stated guidance of INR270 crores

FY26 guidance was exceeded, and order book improved sharply. But the quality of growth is not yet clean because receivables doubled, operating cash flow remained negative, and cash balance stayed negligible.

FY26 was back-ended. This matches management’s comment that Q4/H2 is typically stronger. But it also explains why receivables spike at year-end.

5. Business Metrics: Stable Return Ratios

• FY26 ROE fell compared with FY25 because IPO equity increased the equity base.

• On an increased capital base FY26 ROCE remained strong at ~29% — business generates attractive operating returns on capital.

• The caution is that FY26 operating cash flow was negative.

  • So even though ROE and ROCE look good, the quality of these returns depends on whether receivables convert into cash.

• For FY27, the key monitorable is not only ROE/ROCE. It is whether high ROCE converts into positive operating cash flow.

6. Outlook: Growing at 70%+ CAGR

6.1 FY27 Guidance

FY27 Guidance

FY27 Margins: As I said during my introductory call, we have been growing almost like an 1.7, 1.8x over the last year and we will maintain the momentum. And we have been able to retain both the EBITDA margin as well as the PAT margin. We are very confident that we will be able to maintain at least the trend over the next year and more.

Order book:

• Our order book as of now stands around INR825 crores

• Oder-book Pipeline:

  • Total tenders which are at various stages of evaluation is around INR1,225 crores — around 200 to 300 out of these we are going to book

FY28: Our target of INR1,000 crores revenue by financial year ‘28 is firmly on track.

7. Valuation Analysis — Sugs Lloyd

7.1 Valuation Snapshot

• Current Market Price — ₹126.45

• Market cap — ₹ 293.54 Cr

• Sugs Lloyd looks optically very cheap on FY27/FY28 earnings if management hits the ₹600 Cr / ₹1,000 Cr revenue path.

• The company is not being valued like a high-growth infra-compounder. It is being valued like a risky SME EPC name. The market is probably discounting four things:

  • Cash flow risk — FY26 CFO was negative despite strong PAT.

  • Receivable risk — receivables are very high relative to revenue.

  • Execution risk — revenue has to move from ₹300 Cr to ₹600 Cr to ₹1,000 Cr very quickly.

  • SME/liquidity discount — lower institutional participation, lower disclosure depth, higher volatility.

7.2 Opportunities at Current Valuation

• Current valuation is not demanding

  • Forward valuation becomes very cheap if FY27/FY28 guidance is met

  • If Sugs delivers FY27 numbers, the market may not allow it to trade at 5x earnings for long. Even an 8–10x FY27 P/E gives meaningful upside.

• Order book supports the growth case

  • This is the biggest reason the valuation is interesting.

  • Management said the current order book is heavily Power T&D-led, with Power T&D expected to be the largest contributor going forward.

  • The order book is not only large; it is moving toward Power T&D / smart grid / ADMS / SCADA-type projects, which can get better market valuation than plain solar EPC if execution is good.

• Business mix shift can drive re-rating

  • FY26 revenue was still solar-heavy:

  • But the order book is now ~86% Power T&D. That is a major mix shift.

  • If the market starts viewing Sugs Lloyd as a Power T&D / grid automation / RDSS execution company instead of just a small EPC contractor, the multiple

• What is already priced in?

  • Priced in: Growth risk, SME liquidity risk, receivable risk, EPC risk, and cash-flow weakness.

  • Not fully priced in: FY27 ₹600 Cr revenue delivery, order-book conversion, Power T&D re-rating, positive CFO.

Opportunity is not just earnings growth. It is earnings growth + multiple re-rating.

8.3 Risks at Current Valuation

• Operating cash flow was negative — That is the key problem.

  • The cash-flow statement shows working-capital absorption was heavy, mainly due to the sharp increase in receivables and other assets.

• Receivables risk — profits stuck in balance sheet

  • Trade receivables increased from ₹70.56 Cr to ₹159.25 Cr. That is more than 50% of FY26 revenue. Other current assets also rose to ₹42.76 Cr, and other non-current assets stood at ₹50.28 Cr.

  • Cheap earnings can become a value trap if receivables keep rising.

• FY27 execution risk — valuation depends on a steep ramp

  • Sugs Lloyd has to roughly double revenue in FY27, then grow another ~67% in FY28.

  • This is a very steep ramp for a working-capital-heavy company

• Order-book conversion risk

  • FY27 revenue needs both execution of existing orders and fresh order inflows.

  • Any execution delay, site issue, working-capital bottleneck, or billing delay can hurt FY27 numbers.

• Large-order concentration risk

  • A major part of the order-book jump came from the large ~₹640 Cr order

  • They expect ₹200–250 Cr billing from this order in FY27, with balance moving to FY28.

  • If this large order slows down, FY27 growth can disappoint. Large orders improve visibility, but they also increase concentration and execution dependence.

• Business-mix risk — Power T&D shift is not yet proven in revenue

  • FY26 revenue was still slightly solar-heavy:

  • The order book has shifted to Power T&D, but FY26 revenue did not yet show that shift.

    The market may wait for FY27 numbers before valuing Sugs Lloyd as a Power T&D / smart-grid company. Until then, it may continue to get an EPC discount.

• Government/DISCOM exposure risk

  • Management says they prefer projects funded by Government of India or multilateral agencies, which reduces payment risk. But billing still often flows through government entities/DISCOMs.

  • Even if ultimate funding is secure, project approvals, billing certification, retention release, and collection timelines can stretch. This is exactly why receivables matter.

• SME listing and liquidity risk

  • Sugs Lloyd is listed on the SME platform — listed on September 5, 2025.

  • SME stocks can have lower liquidity, wider spreads, higher volatility, and sharper drawdowns.

  • Entry may be easy; exit during bad news may not be.