At a Glance
Emerald Finance Ltd is a Delhi-based NBFC that partners with 40+ banks to originate MSME and retail loans. Its profits are surging (108% TTM growth), OPM has hit 73%, and FII stake rose 9x in a year. But with a 3.85x P/B and ballooning working capital days (1,410!), is this just multiple expansion or a real fintech NBFC story in the making?
1. 🔥 Introduction with Hook
Stock up 132% in 1 year. Profits doubled. Margin = 73%.
But wait…
- CMP ₹94
- Book Value = ₹24.5
- P/B = 3.85x
- ROE = just 13.5%
- Promoters offloading stake 🔻
- Working capital days = 1,410 😬
In a sector full of Bajajs and Cholamandalam, does this microcap have legs or is it all preferential issue ka magic? Let’s dig in.
2. 🧠 WTF Do They Even Do?
Emerald Finance = NBFC + Loan Aggregator + EWA Fintech.
Here’s what they offer:
- 🔹 Loan Origination:
Through subsidiary Eclat Net Advisors, they originate loans for SBI, Canara Bank, Axis, Yes Bank etc. - 🔹 Retail/MSME Lending:
Disburse small ticket personal and business loans. - 🔹 Earned Wage Access (EWA):
Fast-growing vertical allowing employees early access to salaries. - 🔹 Commission Income:
For referrals + servicing third-party NBFC clients.
It’s basically an NBFC-as-a-platform play — but with skin in the game via its own lending book.
3. 💰 Financials – Profit, Margins, ROE, Growth
| Metric | FY25 (TTM) |
|---|---|
| Sales | ₹24 Cr |
| Net Profit | ₹10.4 Cr |
| Operating Margin | 73% |
| ROCE | 18.3% |
| ROE | 13.5% |
| EPS | ₹3.05 |
| Dividend | ₹0.10 |
📈 Net profit grew from ₹4 Cr → ₹10.4 Cr in 2 years.
📈 Margins improving due to fee-based income + lean ops.
📉 But cash from ops is deeply negative.
4. 💸 Valuation – Is It Cheap, Meh, or Crack?
| Metric | Value |
|---|---|
| CMP | ₹94.3 |
| P/E (TTM) | 31.4x |
| Book Value | ₹24.5 |
| P/B | 3.85x |
| Market Cap | ₹326 Cr |
📊 Fair Value Calculation
Let’s say FY26 profit hits ₹15 Cr (on growth + leverage).
Give it 15–18x P/E (small NBFC average), we get:
FV = ₹225–₹270 Cr market cap = ₹65–₹80/share
🎯 FV Range = ₹65–₹80
Current CMP of ₹94 looks fully priced, maybe a bit frothy.
5. 🧂 What’s Cooking – News, Triggers, Drama
Emerald’s been BUSY:
- ✅ Raised ₹10 Cr via preferential allotment in Jan 2025
- ✅ Raised ₹15 Cr more in March
- ✅ Raised ₹1.2 Cr in May via debentures
- ✅ Partnered with Baya PTE (Singapore fintech) to expand EWA biz
- ✅ 246% YoY PAT growth in Q4
- ✅ 20+ new EWA clients onboarded
- ✅ FII stake up from 0.7% → 9.3% in 1 year 😮
🧠 Clearly, they’re cooking a growth story — but will the EWA gravy last?
6. 💾 Balance Sheet – How Much Debt, How Many Dreams?
| Metric | FY25 |
|---|---|
| Equity Capital | ₹35 Cr |
| Reserves | ₹50 Cr |
| Borrowings | ₹16 Cr |
| Other Liabilities | ₹6 Cr |
| Total Liabilities | ₹106 Cr |
| Fixed Assets | ₹1 Cr |
🟢 Clean, modest leverage
🔴 No significant asset base
📌 Book primarily made up of lending + commission receivables
7. 💵 Cash Flow – Sab Number Game Hai
| Metric | FY25 |
|---|---|
| Cash from Ops | -₹13 Cr |
| Cash from Financing | ₹28 Cr |
| Net Cash Flow | ₹15 Cr |
⚠️ Negative operating cash flow is a big red flag.
🔼 Heavily reliant on equity raises and borrowings to grow.
This ain’t self-funding — yet.
8. 📊 Ratios – Sexy or Stressy?
| Ratio | Value |
|---|---|
| ROCE | 18.3% |
| ROE | 13.5% |
| OPM | 73% |
| Interest Coverage | 5.9x |
| EPS (TTM) | ₹3.05 |
| Working Capital Days | 1,410 😵💫 |
🧠 High working capital days = long receivable cycle from partner banks?
🧠 ROE still lags top NBFCs despite strong margin optics.
9. 📈 P&L Breakdown – Show Me the Money
| Year | Sales | Profit | OPM | EPS |
|---|---|---|---|---|
| FY22 | ₹8 Cr | ₹2 Cr | 47% | ₹0.85 |
| FY23 | ₹13 Cr | ₹4 Cr | 53% | ₹1.37 |
| FY25 (TTM) | ₹24 Cr | ₹10 Cr | 73% | ₹3.05 |
🔥 Revenue CAGR (3Y) = 37%
🔥 Profit CAGR (3Y) = 53%
🧠 Looks like a scaling flywheel — but sustainability depends on lending book quality.
10. 🥷 Peer Comparison – Who Else in the Game?
| Company | P/E | ROE | OPM | CMP |
|---|---|---|---|---|
| Bajaj Finance | 34x | 19% | 69% | ₹933 |
| Muthoot | 20x | 19% | 72% | ₹2,641 |
| Cholamandalam | 30x | 20% | 70% | ₹1,532 |
| Emerald Finance | 31x | 13.5% | 73% | ₹94.3 |
🔍 Valuation-wise, Emerald = same ballpark as top NBFCs.
🔻 But ROE is much lower, and book is smaller.
11. 🧩 Miscellaneous – Shareholding, Promoters, FII Buzz
| Category | % Holding (Mar 2025) |
|---|---|
| Promoters | 59.5% (was 70% last year) |
| FIIs | 9.36% (was 0.71% last year!) |
| Public | 31.1% |
| Shareholders | 9,883 (tripled in 1 year) |
📉 Promoters sold ~11% in 1 year
📈 FIIs jumped 9x — could be anchor investors
🧠 Retail interest is heating up
12. 📦 EduInvesting Verdict™
Emerald Finance is:
✅ A microcap NBFC with real growth
✅ Platform model = capital-lite scaling
✅ EWA + loan origination = fintech flavour
BUT ALSO:
⚠️ Negative cash flows
⚠️ Working capital cycle explosion
⚠️ Promoter dilution
⚠️ Valuation beyond fundamentals (P/B = 3.85x)
🎯 Fair Value Range = ₹65–₹80
CMP = ₹94 = Already priced in future perfection
Verdict: Emerald might be shining now, but polish it with due diligence. It’s a story-in-progress — not a guaranteed emerald mine.
✍️ Written by Prashant | 📅 11 July 2025
Tags: Emerald Finance, NBFC stocks, MSME loans, fintech lending, EWA, smallcap financials, EduInvesting, loan origination platforms, multibagger NBFC, preferential issue, microcap India
