Arabian Petroleum Limited

Sector n/a · NSE

₹82.55+₹0.60 (+0.73%)

DalalBaazaar Score

59 / 100

🟡 Moderate

Verdict

NEUTRAL

Risk

High

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

In simple words: Strong business and financial position, with both sales and profits growing well. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:48 pm

Understanding the Business

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

How does it make money?

Turns over ₹413 Cr a year. Of every ₹100 of sales, about ₹3 reaches shareholders as profit, with ₹5 left at the operating level before interest, tax and depreciation.

What is its competitive advantage?The numbers suggest a real one

ROCE has stayed above 15% in every year available and stands at 25.2%. Returns that high normally get competed away; when they persist, something is protecting them. What that something is — brand, scale, switching costs, regulation — the accounts cannot tell you.

What has been driving growth?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved +70% while net margin moved +40% 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+70%

Margin effect+40%

DalalBaazaar Score

59/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Micro Cap: thinner liquidity and sharper drawdowns are normal
✗ Negative free cash flow means dependence on external funding

Quality vs. Valuation

Company Quality

65/ 100

Good

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

Valuation

88/ 100

Cheap

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

A good business currently available at an undemanding price — the combination this framework is built to look for.

vs. its own history

Not enough price and earnings history

vs. sector peers

Not enough peers with a usable P/E

vs. generic bands

No P/E available

EV/EBITDA

7.0x

PEG

—

What's Good / What's Bad

🟢 What's Going Well2

High return on capital employed
ROCE of 25.2% is the mark of a business that converts capital into profit efficiently.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention2

Return on equity is falling
ROE has dropped from 21.4% to 16.2% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 36.2% to 25.2% — often a sign of competition or overexpansion.

Red Flags

4 items require attention · 2 high · 2 watch

🔴Profit up while operating cash flow fallsFinancial
Reported profit rose but cash generated by operations declined — worth checking whether earnings are being supported by non-cash items or working capital.
🔴Inventory building faster than salesFinancial
Inventory up 173% against revenue up 70% — stock may not be moving.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹18 Cr in the latest year.
🟡Receivables growing faster than salesFinancial
Receivables up 116% against revenue up 70% — sales are being booked faster than they are collected.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 25.2% means each rupee reinvested earns well above what capital costs. If the company can keep deploying at this rate, growth creates value rather than just consuming cash.
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?

Sales are being booked faster than collected
Receivables are up 116% against revenue up 70%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
Returns on shareholder capital are falling
ROE has dropped from 21.4% to 16.2%. Each rupee of equity earns less than it did, so profit growth increasingly depends on raising more capital rather than on the existing base working harder.
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.
Several serious flags at once
2 high-severity checks triggered. Individually each has an explanation; together they raise the chance that something structural is wrong rather than a one-off.

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

1Revenue growth stays above 15% a year✓ 19.4% CAGR
Latest reported year was 44.9%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 3%✓ 4.7%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Debt / EBITDA stays below 2x✗ 2.5x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
4Free cash flow remains positive✗ -₹18 Cr
Profit that never becomes cash eventually stops being profit.
5ROCE stays above 22%✓ 25.2%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

7 / 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
✓ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✓ Short-term technical trend isn't bearish

Price history

Quick Metrics

4 good · 6 neutral · 1 weak

Market Cap

₹90 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

Not available

No data

Source didn't return this field

P/B Ratio

Not available

No data

Source didn't return this field

EPS (TTM)

Not available

No data

Source didn't return this field

ROE

16.2%

Strong

Strong capital efficiency

ROCE

25.2%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

0.69x

Moderate

Moderate leverage

Revenue Growth (YoY)

44.9%

Healthy

Healthy top-line growth

Profit Growth (YoY)

23.5%

Healthy

Profits growing at a healthy clip

Dividend Yield

None

No dividend yield reported — usually means no payout, but verify if one was recently initiated

Free Cash Flow

-₹18 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

Gross Margin

12.1%

Proxy

Operating margin unavailable — showing gross margin instead

Net Margin

2.7%

Weak

Very little revenue reaches the bottom line

Current Ratio

1.52

Comfortable

Healthy short-term liquidity

Technical Snapshot

SMA 20 / SMA 50

94.7 / 88.9

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

67.2

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹243 Cr	₹262 Cr	₹285 Cr	₹413 Cr	+19.4%
EBITDA	₹10 Cr	₹15 Cr	₹17 Cr	₹19 Cr	+23.1%
EBITDA Margin	4.3%	5.6%	5.9%	4.7%	—
PAT (Net Profit)	₹5 Cr	₹7 Cr	₹9 Cr	₹11 Cr	+33.5%
EPS	₹4.33	₹7.2	₹9.02	—	—
ROE	21.4%	13.9%	15.6%	16.2%	—
ROCE	36.2%	23.5%	24.2%	25.2%	—
Total Debt	₹38 Cr	₹35 Cr	₹28 Cr	₹48 Cr	+7.6%
Free Cash Flow	-₹6 Cr	-₹10 Cr	₹12 Cr	-₹18 Cr	—

🟢 Revenue has grown at 19.4% a year over 3 years.

🟢 EBITDA has grown at 23.1% a year over 3 years.

🟡 EBITDA Margin has held roughly flat at 4.7% over 3 years.

🟢 PAT (Net Profit) has grown at 33.5% a year over 3 years.

🔴 ROE has fallen from 21.4% to 16.2% over 3 years (-5.2 pts).

🔴 ROCE has fallen from 36.2% to 25.2% over 3 years (-11.0 pts).

🔴 Total Debt has grown at 7.6% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹172 Cr

Total Liabilities

₹103 Cr

Cash & Equivalents

₹3 Cr

Operating Cash Flow

-₹15 Cr

Capex

-₹2 Cr

Recent News

1 positive1 mixed4 general

Is Now The Time To Put Arabian Petroleum (NSE:ARABIAN) On Your Watchlist?

Simply Wall Street, 22 Sept

Arabian Petroleum Ltd Key Financial Ratios – Valuation, Profitability & More

Value Research, 31 Aug

Solid Earnings May Not Tell The Whole Story For Arabian Petroleum (NSE:ARABIAN)

Simply Wall Street, 05 JunResults

🟡Mixed / dependsA results event. The figures on this page update once the new statements reach the data feed, which usually lags the announcement.

Arabian Petroleum FY26 revenue rises 44.88% to ₹41,327.37 lakh

scanx.trade, 11 JunResults

🟢Potentially positiveReported improvement. Check whether it came from volume, price or a one-off item before treating it as a trend.

COMMENTARY: Saudi Arabia slices crude oil prices, but is it enough?

Reuters, 07 Jul

Gandhar Oil Refinery (India) Ltd. (GANDHAR): Gandhar Oil Refinery Share Price Hits Fresh 52-Week High

Univest, 23 Jul

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.
Sector/industry classification unavailable — verify manually for peer comparison.
3 metrics couldn't be retrieved for this stock — this is more common for smaller or thinly-covered listings.

DalalBaazaar Thesis

StrongFinancial Health · Growth

MiddlingBusiness Quality · Profitability · Valuation

WeakRisk

Points for each in the Score ↑

Attractive on both counts

A good business currently available at an undemanding price — the combination this framework exists to look for. The work left is qualitative: whether the advantage the numbers imply is one you can identify and expect to last. 2 high-severity red flags sit above this conclusion and should be read first.

2 of 5 tripwires tripped — Debt / EBITDA stays below 2x; Free cash flow remains positive · see Key things to watch ↑