Baba Arts Limited

Communication Services — Entertainment · BSE

₹22.80−₹0.86 (−3.63%)

DalalBaazaar Score

50 / 100

🟡 Moderate

Verdict

CAUTION

Risk

High

Driven by micro-cap size, which brings thin liquidity, a very high earnings multiple, which leaves little margin for disappointment, falling profits.

In simple words: The business is earning a fairly low return on the money invested in it, but sales are shrinking. Valuation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:03 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 Baba Arts Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Baba Arts Limited engages in the production and distribution of cinematic and television content in the United Kingdom and India. The company operates through three segments: Trading IPR of Film Rights; Production & Distribution of Films & TV Serials; and Digital Media Content.

IndustryEntertainment

SectorCommunication Services

Employees5

Annual revenue₹15 Cr

How does it make money?

Turns over ₹15 Cr a year. Of every ₹100 of sales, about ₹4 reaches shareholders as profit, with ₹6 left at the operating level before interest, tax and depreciation. Each of its 5 employees supports ₹2.99 Cr of revenue a year, the signature of a capital- or asset-led business.

EBITDA margin6.1%

Net margin4.4%

Revenue / employee₹2.99 Cr

Who are its competitors?

The closest listed comparisons in its industry are BHARTI AIRTEL LIMITED, VODAFONE IDEA LIMITED. These are the companies its valuation and returns are measured against elsewhere in this report.

BHARTI AIRTEL LIMITEDP/E 39.8x · ROE 20.2%

VODAFONE IDEA LIMITEDP/E 3.6x · ROE —

What is its competitive advantage?Little sign of one

Returns on capital of 3.0% 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.

ROCE3.0%

ROE2.4%

Peer median ROE20.2%

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 +436% while net margin moved -88% 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+436%

Margin effect-88%

DalalBaazaar Score

50/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ P/E of 190.0x is demanding — it needs sustained high growth to justify
✗ P/E is 276% above its own historical median of 50.5x — expensive by its own standards

Quality vs. Valuation

Company Quality

53/ 100

Average

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

Valuation

26/ 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

190.0x

3Y Median

50.5x

40 monthly readings · mean 57.2x · range 22.0x–183.9x

Sector Median

21.7x

median of 2 sector peers

⚠️Current valuation is approximately 276% above its 3y median of 50.5x. Paying more than usual needs a reason — faster growth, a better balance sheet, or a re-rating you believe in.

⚠️Against its sector it trades 774% above the peer median of 21.7x.

vs. its own history

Expensive

50.5x median over 40 months · +276%

vs. sector peers

Expensive

21.7x median of 2 peers · +774%

vs. generic bands

Expensive

Above 35x

P/E (Trailing)

190.0x

P/B

4.34x

EV/EBITDA

125.4x

PEG

—

Dividend Yield

None

What's Good / What's Bad

🟢 What's Going Well2

Cash flow has turned positive
Free cash flow moved from negative to positive over 3 years.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention3

Margins are compressing
EBITDA margin has slipped from 50.1% to 6.1% over 3 years.
Return on capital is falling
ROCE has declined from 5.6% to 3.0% — often a sign of competition or overexpansion.
Valuation above its historical average
At 190.0x the stock trades 276% above its own median of 50.5x.

Red Flags

2 items require attention · 1 high · 1 watch

🔴Significant margin compressionFinancial
EBITDA margin has fallen 44.0 points, from 50.1% to 6.1%.
🟡Profit is decliningFinancial
Net profit is down 36% over 3 years.

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 50.1% to 6.1%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
The price already assumes success
The stock trades 276% above its own median multiple. At this level the business has to deliver just to stand still, and a stumble is repriced twice — lower earnings on a lower multiple.
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 56% a year✓ 75.0% CAGR
Latest reported year was -89.2%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 4%✓ 6.1%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✓ ₹0 Cr
Profit that never becomes cash eventually stops being profit.
4ROCE stays above 8%✗ 3.0%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.
5Valuation vs its own median of 50.5x✗ 190.0x today
A re-rating above its own history needs a reason; without one it is just a higher price.

Investment Checklist

3 / 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
✓ 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
✓ Short-term technical trend isn't bearish

Price history

Quick Metrics

2 good · 4 neutral · 5 weak

Market Cap

₹120 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

190.0x

Expensive

Expensive — verify against sector peers

P/B Ratio

4.34x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹0.12

Profitable

Profitable on a per-share basis

ROE

2.4%

Weak

Weak capital efficiency

ROCE

3.0%

Weak

Low return on total capital employed

Debt/Equity

Not available

No data

Source didn't return this field

Revenue Growth (YoY)

-89.2%

Shrinking

Sales are contracting

Profit Growth (YoY)

-17.9%

Falling

Profits are shrinking

Dividend Yield

None

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

Free Cash Flow

₹0 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

CMP

₹22.8

Operating Margin

-62.9%

Weak

Thin margins leave little room for error

Net Margin

5.5%

Average

Average bottom-line conversion

Current Ratio

34.70

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.58

Defensive

Steadier than the market

52W Range Position

91%

Near high

Near its 52-week high

Technical Snapshot

SMA 20 / SMA 50

16.6 / 15.2

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

84.4

Overbought zone

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹3 Cr	₹11 Cr	₹6 Cr	₹15 Cr	+75.0%
EBITDA	₹1 Cr	₹3 Cr	₹2 Cr	₹1 Cr	-13.4%
EBITDA Margin	50.1%	26.5%	35.8%	6.1%	—
PAT (Net Profit)	₹1 Cr	₹2 Cr	₹1 Cr	₹1 Cr	-13.9%
EPS	₹0.2	₹0.38	₹0.27	₹0.12	-14.0%
ROE	4.4%	7.8%	5.4%	2.4%	—
ROCE	5.6%	10.7%	7.2%	3.0%	—
Free Cash Flow	-₹2 Cr	₹5 Cr	-₹6 Cr	₹0 Cr	—

🟢 Revenue has grown at 75.0% a year over 3 years.

🔴 EBITDA has shrunk at 13.4% a year over 3 years.

🔴 EBITDA Margin has fallen from 50.1% to 6.1% over 3 years (-44.0 pts).

🔴 PAT (Net Profit) has shrunk at 13.9% a year over 3 years.

🔴 EPS has shrunk at 14.0% a year over 3 years.

🔴 ROE has fallen from 4.4% to 2.4% over 3 years (-2.0 pts).

🔴 ROCE has fallen from 5.6% to 3.0% over 3 years (-2.6 pts).

🟢 Free Cash Flow has turned positive, from -₹2 Cr to ₹0 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹28 Cr

Total Liabilities

₹1 Cr

Total Debt

—

Cash & Equivalents

₹6 Cr

Operating Cash Flow

₹1 Cr

Capex

-₹0 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

80.6%

Corporate Actions

Ex-Dividend Date

27 Aug 2010

Peer Comparison

Company	P/E	ROE
BHARTI AIRTEL LIMITED	39.8x	20.2%
VODAFONE IDEA LIMITED	3.6x	—

Recent News

1 positive5 general

Baba Arts Ltd. (BABA) 52 Week High Streak: Second Straight Session

Univest, 16 Oct

Baba Arts Upper Circuit Today: Price, Data and Peers

Univest, 15 Oct

Baba Arts revenue surges 167% in FY26, net profit dips to ₹65.30 lakh

scanx.trade, 10 OctResults

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

Baba Arts Ltd Hits New 52-Week High of Rs 23.69 on Back of Strong Technical Signals

MarketsMojo, 14 Oct

Baba Arts Ltd. Peer Comparison – Compare with Others

Value Research, 27 Aug

ROBOKIDZ EDUVENTURES LTD. Stock/Share price , NSE/BSE Forecast News and Live Quotes

Equitymaster, 14 Oct

Watch Items

Revenue growth is negative (-89.2%) on the latest reported period — check if this is one-off or a trend.
Trading very close to its 52-week high — momentum-driven entries here carry more mean-reversion risk.
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.
RSI is in overbought territory — momentum entries here carry more short-term pullback risk.

DalalBaazaar Thesis

🔴Business QualityWeak7.5/20

🟢Financial HealthStrong17.5/20

🔴GrowthWeak8.9/20

🔴ProfitabilityWeak6.2/15

🔴ValuationDemanding4.9/15

🟡RiskModerate4.9/10

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

✓Revenue growth stays above 56% a year75.0% CAGR
✓EBITDA margin holds above 4%6.1%
✓Free cash flow remains positive₹0 Cr
✗ROCE stays above 8%3.0%
✗Valuation vs its own median of 50.5x190.0x today