1. At a Glance – Blink and You’ll Miss the Profits
Mercantile Ventures Ltd (MVL) is that awkward uncle of the stock market — rich on paper, polite in meetings, but refuses to work hard. With a market cap of ₹260 Cr, a current price of ₹23.2, and trading at just 0.80x book value, MVL looks like a classic bargain bin find. Sales have surged 30% YoY, profits are up a flashy 85% TTM, and Q3 FY26 profit grew 54.6% QoQ. Sounds hot, right?
Now comes the plot twist. ROCE is 1.53%, ROE barely 3%, EV/EBITDA is a mind-numbing 70x, and operating margins hover near 1% — thinner than airline coffee. This is a company sitting on assets, investments, subsidiaries, and schemes of amalgamation… but somehow struggling to squeeze out decent operating returns.
So the big question:
👉 Is MVL an undervalued turnaround play quietly compounding in the background, or just a sleepy balance-sheet-heavy company surviving on “other income jugaad”?
Let’s put on the detective hat 🕵️♂️ and investigate.
2. Introduction – From NBFC to Manpower Supplier: The Identity Crisis
Mercantile Ventures Ltd was incorporated in 1985, originally as an NBFC. Over time, it politely exited lending and reinvented itself as a leasing + facility management + manpower supply company. That’s corporate-speak for:
“We rent stuff, manage buildings, supply people, and invest surplus money wherever possible.”
MVL today earns money from:
- Leasing of immovable properties
- Security & manpower services
- Maintenance & facility management
- Investment income (interest, dividends, fair value changes)
And if that wasn’t enough, it has also been busy with amalgamations, acquisitions, subsidiaries, and related party transactions, making it less of a boring service company and more of a corporate structure puzzle.
Despite steady sales growth of 25–30% CAGR over 3 years, profitability has been inconsistent. Some years look decent, others fall flat thanks to negative operating leverage, erratic other income, and tax-rate gymnastics that would make a CA raise an eyebrow.
So before getting excited by low P/B and “almost debt-free” banners — we need
to understand how MVL actually makes money. Or tries to.
3. Business Model – WTF Do They Even Do?
Let’s simplify MVL’s business for a tired investor scrolling at midnight.
A. Leasing of Properties
MVL acquires immovable properties and leases them out. Rental income forms roughly 11–13% of revenue. This is supposed to be the stable, annuity-like part of the business.
Problem?
- Rentals are low-yield
- Capital employed is high
- Returns are… you guessed it… mediocre
Would you park hundreds of crores in real estate to earn single-digit yields? MVL apparently said yes.
B. Manpower & Security Services
This is the largest chunk.
FY23 segment revenue:
- Security Services: ~49%
- Manpower Services: ~26%
After acquiring Walery Security Management Ltd (WSML) in Dec 2023 (MVL holds 75.67%), manpower and security became even more central.
But manpower businesses have a dirty secret:
- Low margins
- High employee costs
- Working capital stress
- Price competition
In other words, high effort, low reward.
C. Facility Management & Sale of Services
Maintenance, housekeeping, and facility services form another ~50% combined revenue when you include “sale of services”.
Again — operationally heavy, margin-light.
D. Investment Activity
This is where MVL quietly survives.
Interest income, dividend income, and fair value changes often rescue profits when operating margins collapse. In FY25, other income was ₹12.88 Cr against operating profit of just ₹1.36 Cr.
Question for you 👇
If operating profit
