ABM Knowledgeware Limited

Technology — Software - Application · NSE

₹161.00+₹3.00 (+1.90%)

DalalBaazaar Score

53 / 100

🟡 Moderate

Verdict

CAUTION

Risk

High

Driven by negative free cash flow, micro-cap size, which brings thin liquidity, falling profits.

In simple words: The business is earning a fairly low return on the money invested in it, though profits are falling even as sales grow. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:09 pm

Caution warranted. Multiple fundamental metrics — flagged in red below — point to either valuation stretch, leverage risk, or weakening profitability. This doesn't mean avoid the stock outright, but it does mean the burden of proof is on the growth story to justify the current price.

Understanding the Business

Company site ↗

The 60-second version of ABM Knowledgeware Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

ABM Knowledgeware Limited, together with its subsidiaries, provides e-governance information security, technology-enabled applications through cloud services, and other software services in India.

IndustrySoftware - Application

SectorTechnology

Employees661

Annual revenue₹103 Cr

How does it make money?

Turns over ₹103 Cr a year. Of every ₹100 of sales, about ₹9 reaches shareholders as profit, with ₹16 left at the operating level before interest, tax and depreciation. Each of its 661 employees supports ₹15.7 lakh of revenue a year, the signature of a people-led business.

EBITDA margin16.2%

Net margin9.1%

Revenue / employee₹15.7 lakh

Who are its competitors?

The closest listed comparisons in its industry are TATA CONSULTANCY SERV LT, INFOSYS LIMITED, HCL TECHNOLOGIES LTD, WIPRO LTD. These are the companies its valuation and returns are measured against elsewhere in this report.

TATA CONSULTANCY SERV LTP/E 17.3x · ROE 45.6%

INFOSYS LIMITEDP/E 15.8x · ROE 32.0%

HCL TECHNOLOGIES LTDP/E 20.4x · ROE 24.6%

WIPRO LTDP/E 14.5x · ROE 15.9%

What is its competitive advantage?Little sign of one

Returns on capital of 6.0% are at or below what the capital likely costs. That is the financial pattern of a business competing largely on price, where advantage has to come from execution rather than position.

ROCE6.0%

ROE3.9%

Peer median ROE32.0%

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved +30% while net margin moved -45% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+30%

Margin effect-45%

DalalBaazaar Score

53/ 100

Moderate

Weighted across six categories. Every point is explained below.

• Revenue CAGR of 9.1% is steady
✗ Profit has declined at 10.6% a year
✗ Profit is compounding slower than revenue — margins are being squeezed as the business grows
✗ Profit fell 26.7% in the latest year

Quality vs. Valuation

Company Quality

50/ 100

Average

How good the business is, ignoring the share price entirely.

Valuation

36/ 100

Expensive

What you are being asked to pay, ignoring how good the business is.

A reasonable business at a reasonable price — neither the quality nor the valuation stands out in either direction.

Historical Valuation

Current P/E

36.4x

Sector Median

16.5x

median of 4 sector peers

⚠️Against its sector it trades 120% above the peer median of 16.5x.

vs. its own history

Not enough price and earnings history

vs. sector peers

Expensive

16.5x median of 4 peers · +120%

vs. generic bands

Expensive

Above 35x

P/E (Trailing)

36.4x

P/B

1.33x

EV/EBITDA

18.8x

PEG

—

Dividend Yield

0.78%

What's Good / What's Bad

🟢 What's Going Well1

Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention4

Margins are compressing
EBITDA margin has slipped from 23.8% to 16.2% over 3 years.
Free cash flow is negative
The business is not currently covering its capital spending from operations.
Return on capital is falling
ROCE has declined from 8.2% to 6.0% — often a sign of competition or overexpansion.
Receivables growing faster than sales
Receivables are up 50% against revenue growth of 30% — customers are taking longer to pay.

Red Flags

4 items require attention · 1 high · 3 watch

🔴Significant margin compressionFinancial
EBITDA margin has fallen 7.6 points, from 23.8% to 16.2%.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹15 Cr in the latest year.
🟡Profit is decliningFinancial
Net profit is down 29% over 3 years.
🟡Receivables growing faster than salesFinancial
Receivables up 50% against revenue up 30% — sales are being booked faster than they are collected.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

Margins are being competed away
EBITDA margin has fallen from 23.8% to 16.2%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
Sales are being booked faster than collected
Receivables are up 50% against revenue up 30%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
A premium to the sector to defend
It trades 120% above the peer median. That premium needs a reason that persists, or it closes.
Size brings its own risk
Micro Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1EBITDA margin holds above 14%✓ 16.2%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Free cash flow remains positive✗ -₹15 Cr
Profit that never becomes cash eventually stops being profit.
3Revenue growth stays above 7% a year✓ 9.1% CAGR
Latest reported year was 4.2%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
4ROCE stays above 8%✗ 6.0%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

4 / 9 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✗ Strong return on capital employed (ROCE ≥ 15%)
✗ Healthy net margin (≥ 10%)
✗ Generates positive free cash flow
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✗ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high

Price history

Quick Metrics

2 good · 5 neutral · 4 weak

Market Cap

₹322 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

36.4x

Fair

Fairly valued against the generic band

P/B Ratio

1.33x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹4.42

Profitable

Profitable on a per-share basis

ROE

3.9%

Weak

Weak capital efficiency

ROCE

6.0%

Weak

Low return on total capital employed

Debt/Equity

Not available

No data

Source didn't return this field

Revenue Growth (YoY)

4.2%

Modest

Modest growth

Profit Growth (YoY)

-26.7%

Falling

Profits are shrinking

Dividend Yield

0.78%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

-₹15 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

CMP

₹161

Operating Margin

18.0%

Good

Healthy core-business profitability

Net Margin

8.1%

Average

Average bottom-line conversion

Current Ratio

7.48

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.39

Defensive

Steadier than the market

52W Range Position

13%

Near low

Near its 52-week low

Technical Snapshot

RSI (14)

36.4

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹80 Cr	₹91 Cr	₹97 Cr	₹103 Cr	+9.1%
EBITDA	₹19 Cr	₹19 Cr	₹20 Cr	₹17 Cr	-4.1%
EBITDA Margin	23.8%	20.7%	20.6%	16.2%	—
PAT (Net Profit)	₹13 Cr	₹14 Cr	₹14 Cr	₹9 Cr	-10.6%
EPS	₹6.61	₹7.24	₹7.19	₹4.72	-10.6%
ROE	6.3%	6.5%	6.1%	3.9%	—
ROCE	8.2%	8.3%	8.8%	6.0%	—
Free Cash Flow	₹3 Cr	₹3 Cr	₹20 Cr	-₹15 Cr	—

🟢 Revenue has grown at 9.1% a year over 3 years.

🔴 EBITDA has shrunk at 4.1% a year over 3 years.

🔴 EBITDA Margin has fallen from 23.8% to 16.2% over 3 years (-7.6 pts).

🔴 PAT (Net Profit) has shrunk at 10.6% a year over 3 years.

🔴 EPS has shrunk at 10.6% a year over 3 years.

🔴 ROE has fallen from 6.3% to 3.9% over 3 years (-2.4 pts).

🔴 ROCE has fallen from 8.2% to 6.0% over 3 years (-2.2 pts).

🔴 Free Cash Flow has turned negative, from ₹3 Cr to -₹15 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹286 Cr

Total Liabilities

₹36 Cr

Total Debt

—

Cash & Equivalents

₹7 Cr

Operating Cash Flow

-₹11 Cr

Capex

-₹3 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

81.5%

Corporate Actions

Dividend Rate

₹1.25

Ex-Dividend Date

23 Jul 2026

Peer Comparison

Company	P/E	ROE
TATA CONSULTANCY SERV LT	17.3x	45.6%
INFOSYS LIMITED	15.8x	32.0%
HCL TECHNOLOGIES LTD	20.4x	24.6%
WIPRO LTD	14.5x	15.9%

Recent News

6 general

ABM Knowledgeware (ABMKNO) Share Price near 52-week low as stock trades at Rs 158

Univest, 12 Oct

ABM Knowledgeware Ltd. Peer Comparison – Compare with Others

Value Research, 04 Sept

ABM Knowledgeware discloses gift transfer of 31,000 shares by designated person

scanx.trade, 29 Sept

ABM Knowledgeware Ltd. Key Financial Ratios – Valuation, Profitability & More

Value Research, 04 Sept

Entertainment Network (India) vs Vertoz vs ABM Knowledgeware

Univest, 13 Oct

ABM Knowledgeware Ltd Share Price

Business Today, 31 Jan

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.
1 metric couldn't be retrieved for this stock — this is more common for smaller or thinly-covered listings.

DalalBaazaar Thesis

🟡Business QualityAdequate10.5/20

🟢Financial HealthStrong13.2/20

🔴GrowthWeak7.7/20

🔴ProfitabilityWeak6.2/15

🟡ValuationFair9.5/15

🟡RiskModerate5.4/10

Unremarkable in both directions

A reasonable business at a reasonable price. Nothing here is alarming and nothing is compelling, which usually means the decision rests on things this data cannot see — the industry's direction, management's intent, and what else is available to you. 1 high-severity red flag sits above this conclusion and should be read first.

This thesis breaks if

✓EBITDA margin holds above 14%16.2%
✗Free cash flow remains positive-₹15 Cr
✓Revenue growth stays above 7% a year9.1% CAGR
✗ROCE stays above 8%6.0%