1. At a Glance
If minimalism were a finance company, Sonal Mercantile Ltd would be it. This 1985-born NBFC sits calmly at a market cap of about ₹156 crore, trades around ₹106, and casually posts quarterly PAT of ₹7.63 crore on revenue of ₹9.79 crore. Yes, read that again slowly. That’s an operating margin flirting with 97%, which is either peak efficiency or the kind of number that makes auditors blink twice and adjust their glasses.
The stock has delivered about 5.3% return over the last three months while the one-year return remains mildly negative. Valuations look deceptively cheap with a P/E of 4.74x and price-to-book of just 0.41x, while ROE hovers around 9–10%. Debt stands tall at roughly ₹294 crore against a net worth of ~₹378 crore (equity plus reserves), giving a debt-to-equity of ~0.78.
The latest quarter shows revenue growth of about 8% YoY, but PAT dipped slightly QoQ by ~2%. This is not a flashy fintech with apps and confetti—this is an old-school NBFC that quietly lends money, earns interest, and refuses to pay dividends like a strict baniya uncle who reinvests every rupee back into the business. Curious already? Good. Let’s open the files.
2. Introduction
Sonal Mercantile Ltd has been around since 1985, which in Indian capital markets means it has survived Harshad Mehta, Ketan Parekh, global financial crises, IL&FS, demonetisation, COVID, and more RBI circulars than most people have had hot dinners. That alone earns it a chair and a glass of water.
The company operates as a Non-Banking Financial Company providing short-term and long-term finance. Its bread and butter are secured and unsecured loans, inter-corporate lending, and investments in quoted and unquoted securities. In simpler words, Sonal Mercantile is that quiet lender in the room who doesn’t talk much but keeps charging interest on time.
What makes it interesting is not scale—this is no Bajaj Finance—but structure. The income statement looks unusually clean. Expenses are tiny. Operating margins are absurdly high. The balance sheet is mostly loans and investments funded by borrowings and equity. Cash flows are… let’s say “theoretical.”
Is this a hidden compounding machine ignored by the market? Or a business so simple that the market just yawns? Or something in between? Let’s dig in, detective-style, because this is a small-cap NBFC and the numbers deserve interrogation.
3. Business Model – WTF Do They Even Do?
Imagine a financial services firm without fancy branding, celebrity ads, or mobile apps. Sonal Mercantile provides financing solutions to individuals and corporates, both secured and unsecured. It also plays in inter-corporate loans, trade financing, bills discounting,
IPO funding, and even arbitrage in stock and commodity markets. Basically, if money can be lent against something—or sometimes against trust—it’s on the menu.
The company earns most of its revenue from interest income on loans. No surprise there. There’s also activity in investments in quoted and unquoted securities, which means part of the balance sheet behaves like a mini investment portfolio.
What’s striking is the cost structure. Operating expenses are almost negligible relative to revenue. This suggests a lean setup—few employees, low branch infrastructure, and heavy reliance on capital deployment rather than operational scale. Think of it less as a retail NBFC and more as a balance-sheet-driven finance company.
For a smart but lazy investor, the explanation is simple: Sonal Mercantile borrows money, lends it at a higher rate, keeps costs low, and pockets the spread. No drama. No apps crashing. Just Excel sheets and loan agreements. The question is—how sustainable is this simplicity?
4. Financials Overview (Quarterly Results – Locked)
The latest official heading clearly states Quarterly Results, so EPS annualisation follows the quarterly rule.
Annualised EPS = Latest quarterly EPS × 4
Latest quarterly EPS (Sep 2025): ₹5.18
Annualised EPS ≈ ₹20.7
Quarterly Comparison Table (₹ crore, EPS in ₹)
| Metric | Latest Qtr (Sep 2025) | Same Qtr LY (Sep 2024) | Prev Qtr (Jun 2025) | YoY % | QoQ % |
|---|---|---|---|---|---|
| Revenue | 9.79 | 9.07 | 9.34 | 7.9% | 4.8% |
| EBITDA | 9.46 | 9.04 | 9.12 | 4.6% | 3.7% |
| PAT | 7.63 | 7.78 | 8.44 | -1.9% | -9.6% |
| EPS (₹) | 5.18 | 5.28 | 5.73 | -1.9% | -9.6% |
Margins remain sky-high, but PAT has softened slightly. Not alarming, but noticeable. The business prints money quietly, but growth is not linear every quarter. Does this PAT wobble matter, or is it just timing of interest and provisions? That’s the million-rupee question.
5. Valuation Discussion – Fair Value Range Only
Method 1: P/E Multiple
Annualised EPS ≈ ₹20.7
Conservative P/E range for small NBFCs:
