ASSET RECONSTRUC CO (I) L

Financial Services — Asset Management · NSE

₹138.95−₹0.60 (−0.43%)

DalalBaazaar Score

70 / 100

🟢 Good

Verdict

REASONABLE

Risk

Moderate

Driven by micro-cap size, which brings thin liquidity.

In simple words: Reasonable but unspectacular business quality, with modest growth. Nothing obvious stands out as stretched — the usual checks on business quality and management still apply.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:45 pm

Understanding the Business

Company site ↗

The 60-second version of ASSET RECONSTRUC CO (I) L — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Asset Reconstruction Company (India) Limited operates as an asset reconstruction company, acquiring and resolving distressed assets and non-performing loans.

IndustryAsset Management

SectorFinancial Services

Employees206

Annual revenue₹321 Cr

How does it make money?

Turns over ₹321 Cr a year. Of every ₹100 of sales, about ₹110 reaches shareholders as profit, with ₹122 left at the operating level before interest, tax and depreciation. Each of its 206 employees supports ₹1.56 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹1.56 Cr

Who are its competitors?

The closest listed comparisons in its industry are BAJAJ FINANCE LIMITED, HDFC BANK LTD, ICICI BANK LTD., STATE BANK OF INDIA. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?Not assessable from these ratios

For a lender, returns on capital are shaped by leverage and funding cost rather than by pricing power, so the usual financial signature of an advantage does not apply. Judge this one on deposit franchise, cost of funds and asset quality — none of which are in this data.

Peer median ROE16.5%

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 +34% while net margin moved -8% 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+34%

Margin effect-8%

DalalBaazaar Score

70/ 100

Good

Weighted across six categories. Every point is explained below.

✗ Micro Cap: thinner liquidity and sharper drawdowns are normal
✓ Profits have been consistent from year to year

Quality vs. Valuation

Company Quality

69/ 100

Good

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

Valuation

72/ 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.

Historical Valuation

Current P/E

11.8x

Sector Median

17.0x

median of 4 sector peers

🟢Against its sector it trades 31% below the peer median of 17.0x.

vs. its own history

Not enough price and earnings history

vs. sector peers

Cheap

17.0x median of 4 peers · -31%

vs. generic bands

Cheap

Below 15x

EV/EBITDA

14.3x

PEG

1.67

What's Good / What's Bad

🟢 What's Going Well2

Margins are improving
EBITDA margin is up from 72.2% to 121.5% over 3 years.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention1

Return on capital is falling
ROCE has declined from 14.2% to 12.0% — often a sign of competition or overexpansion.

Red Flags

1 item require attention · 1 watch

🟡Low reported insider holdingOwnership
Reported insider holding is 5.0%. For Indian companies this field is an unreliable proxy — check the official promoter shareholding in the exchange filing.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Margin expansion has further to run
EBITDA margin has risen from 72.2% to 121.5%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Cheaper than its peers
It trades 31% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.
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?

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

1Revenue growth stays above 8% a year✓ 10.1% CAGR
Latest reported year was 131.7%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 120%✓ 121.5%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Return on equity stays above 8%✓ 9.3%
For a lender this is the cleanest single read on whether the book is being grown profitably.

Investment Checklist

8 / 10 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
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high

Price history

Quick Metrics

6 good · 5 neutral · 0 weak

Market Cap

₹4,514 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

11.8x

Cheap

Cheap against the generic band

P/B Ratio

1.19x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹11.79

Profitable

Profitable on a per-share basis

ROE

9.3%

Moderate

Moderate capital efficiency

ROCE

12.0%

Moderate

Moderate return on the capital in the business

Debt/Equity

0.41x

Low

Conservative leverage

Revenue Growth (YoY)

131.7%

Healthy

Healthy top-line growth

Profit Growth (YoY)

8.3%

Modest

Slow profit growth

Dividend Yield

None

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

Free Cash Flow

₹192 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

Operating Margin

70.9%

Good

Healthy core-business profitability

Net Margin

53.4%

Good

Strong bottom-line conversion

Current Ratio

2.61

Comfortable

Healthy short-term liquidity

52W Range Position

36%

Mid-range

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹240 Cr	₹323 Cr	₹323 Cr	₹321 Cr	+10.1%
EBITDA	₹173 Cr	₹209 Cr	₹374 Cr	₹390 Cr	+31.0%
EBITDA Margin	72.2%	64.8%	115.8%	121.5%	—
PAT (Net Profit)	₹287 Cr	₹330 Cr	₹330 Cr	₹352 Cr	+7.1%
EPS	₹8.82	₹10.17	₹10.14	—	—
ROE	10.2%	10.7%	9.6%	9.3%	—
ROCE	14.2%	12.1%	11.0%	12.0%	—
Total Debt	₹118 Cr	₹151 Cr	₹307 Cr	₹1,205 Cr	+117.0%
Free Cash Flow	₹294 Cr	₹546 Cr	₹282 Cr	₹192 Cr	-13.3%

🟢 Revenue has grown at 10.1% a year over 3 years.

🟢 EBITDA has grown at 31.0% a year over 3 years.

🟢 EBITDA Margin has risen from 72.2% to 121.5% over 3 years (+49.3 pts).

🟢 PAT (Net Profit) has grown at 7.1% a year over 3 years.

🟡 ROE has held roughly flat at 9.3% over 3 years.

🔴 ROCE has fallen from 14.2% to 12.0% over 3 years (-2.2 pts).

🔴 Total Debt has grown at 117.0% a year over 3 years.

🔴 Free Cash Flow has shrunk at 13.3% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹5,726 Cr

Total Liabilities

₹2,771 Cr

Cash & Equivalents

₹158 Cr

Operating Cash Flow

₹194 Cr

Capex

-₹2 Cr

Shareholding (proxy)

Institutional Holding

81.4%

Insider Holding

5.0%

Peer Comparison

Company	P/E	ROE
BAJAJ FINANCE LIMITED	30.2x	17.8%
HDFC BANK LTD	15.9x	13.8%
ICICI BANK LTD.	18.1x	16.5%
STATE BANK OF INDIA	10.3x	15.2%

Recent News

2 mixed4 general

Asset Reconstruction Company Shares Surge 10%: Q1 Profit Doubles

Univest, 07 OctPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

At the upper circuit and record high! Asset Reconstruction Company shares surge 10% - What is fuelling the stock rise?

Livemint, 07 OctPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

ASSET RECONSTRUC CO (I) L Share Price - Live NSE: ARCIL Stock Price & Chart

Upstox, 17 Sept

Asset Reconstruction Company (India) Ltd. Share Price Live Today

CNBC TV18, 09 Sept

Asset Reconstruction Company shares list flat at Rs 139 on BSE, NSE

The Economic Times, 17 Sept

Arcil shares make flat debut at issue price on NSE, BSE; should you buy, sell or hold?

Moneycontrol.com, 17 Sept

Watch Items

This is a financial-sector business: borrowing is its raw material, not leverage in the usual sense. Debt/Equity and ROCE here aren't comparable to a manufacturer's — read them alongside NIM, GNPA and capital adequacy from the company's own disclosures.
Cross-check against the company's latest quarterly filing / investor presentation before acting.
Reported insider holding is low — cross-check the official promoter shareholding % in the company's exchange filing.

DalalBaazaar Thesis

StrongBusiness Quality · Financial Health · Valuation

MiddlingGrowth · Profitability · Risk

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.

All 3 tripwires holding · see Key things to watch ↑