At a Glance
Dar Credit & Capital Ltd (DCCL) posted a Q1 FY26 profit of ₹2.04 Cr on sales of ₹10.98 Cr, boasting operating margins near 70%—a number that would make fintech giants jealous. But hold the applause. This is a micro-NBFC with a market cap under ₹80 Cr, rising borrowings (₹145 Cr), and working capital days at 850+ (basically, cash trapped forever). The stock trades at P/E 10.5, below peers, and at 0.8x book value, which screams undervalued—if you ignore liquidity risks.
Introduction
Dar Credit & Capital is the neighborhood moneylender dressed up in an NBFC suit. Incorporated in 1994, it focuses on providing credit to underserved segments—municipality workers, women entrepreneurs, and small businesses in semi-urban areas. Noble mission, risky clientele. Its financials reveal a company that earns chunky margins but remains chained by slow cash cycles, modest growth, and heavy reliance on borrowings.
Despite its SME listing, the company has shown improving profits (PAT CAGR 39% over three years) but lacks the scale or investor attention that big NBFCs enjoy. The Q1 FY26 results show a steady profit but don’t exactly light fireworks.
Business Model (WTF Do They Even Do?)
Dar Credit operates as a micro-lender focusing on low-income and underbanked borrowers. Its products include small-ticket personal loans, business loans, and microfinance. Revenue is primarily interest income from loans extended, with margins benefiting from high yields.
The flip side? Loan recovery risks are high, provisioning can eat into profits, and regulatory scrutiny of NBFC lending practices adds spice to the risk curry. Their niche focus offers strong spreads but at the cost of scalability.
Financials Overview
| ₹ Cr | FY23 | FY24 | FY25 | Q1 FY26 |
|---|---|---|---|---|
| Revenue | 25.4 | 32.7 | 41.0 | 11.0 |
| EBITDA | 16.4 | 21.5 | 28.8 | 7.6 |
| PAT | 2.7 | 3.7 | 7.0 | 2.0 |
| OPM % | 64% | 66% | 70% | 69% |
| ROE % | 6.7% | 10% | 9.7% | – |
Commentary: Margins are outstanding for an NBFC of this size, but absolute profits remain small. Borrowings increased, making leverage a key watchpoint.
Valuation
- P/E Method:
EPS TTM ≈ ₹6.9 → At P/E 12 (reasonable for small NBFC) → Fair value ≈ ₹83.
CMP ₹55 suggests undervaluation. - P/B Method:
Book Value ₹69 → At 1x BV → Fair value ₹69. - DCF (simplified):
FCF small, growth 10%, WACC 12% → Fair value ≈ ₹60–₹70.
Fair Value Range: ₹60–₹80, implying 10–40% upside if risks are controlled.
What’s Cooking – News, Triggers, Drama
- Q1 FY26: PAT ₹2 Cr, margins stable.
- Equity Raise: Share capital jumped to ₹14.3 Cr—dilution but growth capital.
- Loan Book: Growing, but borrower risk remains high.
- Red Flags: Low interest coverage, high working capital days (850+), dependence on borrowings.
- Trigger: Expansion into underserved segments and improved collections could boost earnings.
Balance Sheet
| Assets | FY25 |
|---|---|
| Total Assets | ₹223 Cr |
| Net Worth | ₹74 Cr |
| Borrowings | ₹145 Cr |
| Liabilities | ₹5 Cr |
Remarks: Borrowings form two-thirds of the balance sheet—typical for NBFCs, but any slip in collections could hurt.
Cash Flow – Sab Number Game Hai
| ₹ Cr | FY23 | FY24 | FY25 |
|---|---|---|---|
| Operating CF | -4.9 | -20.9 | 26.7 |
| Investing CF | 14.0 | 3.7 | 4.1 |
| Financing CF | -0.5 | 28.3 | -42.3 |
Remarks: Operating cash turned positive in FY25, but volatility remains.
Ratios – Sexy or Stressy?
| Ratio | FY25 |
|---|---|
| ROE | 9.7% |
| ROCE | 12.5% |
| P/E | 10.5 |
| PAT Margin | 17% |
| D/E | 2.0 |
Remarks: ROE is moderate, D/E high but manageable if collections stay strong.
P&L Breakdown – Show Me the Money
| ₹ Cr | FY23 | FY24 | FY25 |
|---|---|---|---|
| Revenue | 25.4 | 32.7 | 41.0 |
| EBITDA | 16.4 | 21.5 | 28.8 |
| PAT | 2.7 | 3.7 | 7.0 |
Remarks: Growth is steady, profit doubling YoY in FY25. Q1 FY26 continues this trend.
Peer Comparison
| Company | Rev (₹ Cr) | PAT (₹ Cr) | P/E |
|---|---|---|---|
| Bajaj Finance | 73,107 | 17,425 | 31 |
| Shriram Finance | 43,778 | 8,508 | 14 |
| Muthoot Finance | 20,214 | 5,333 | 20 |
| Dar Credit | 42 | 7 | 10.5 |
Remarks: Compared to giants, Dar is a micro-player with niche focus, but valuation is cheap.
Miscellaneous – Shareholding, Promoters
- Promoter Holding: 68.98% (comfortable)
- FIIs: 3.71% (small but present)
- DIIs: 7.76%
- Public: 19.54%
Promoters control the ship, with some institutional interest.
EduInvesting Verdict™
Dar Credit & Capital is a micro-NBFC with strong margins and improving profits, but it’s no Bajaj Finance. The small scale, borrower risk, high leverage, and working capital stress make it a cautious play. On the upside, low valuation and niche focus offer growth potential if management executes well.
SWOT Analysis
- Strengths: High margins, niche focus, low valuation.
- Weaknesses: Small scale, high D/E, volatile cash flows.
- Opportunities: Rural credit growth, equity infusion for expansion.
- Threats: Defaults, regulatory tightening, rising borrowing costs.
Final word? A high-margin micro-lender that could shine—or vanish—depending on collection discipline.
Written by EduInvesting Team | 30 July 2025
SEO Tags: Dar Credit & Capital, NBFC, Rural Lending, Stock Analysis
