California Software Company Limited

Technology — Software - Application · NSE

₹33.32+₹1.58 (+4.98%)

DalalBaazaar Score

75 / 100

🟢 Good

Verdict

REASONABLE

Risk

Very High

Driven by high debt relative to equity, 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. Debt is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:08 pm

Mixed / neutral. No major red flags jump out, but nothing here screams "obviously cheap" either. This is a name that needs a peer comparison and a view on near-term earnings triggers before sizing a position.

Understanding the Business

Company site ↗

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

What does this company do?

California Software Company Limited provides customized software, smart CRM and ERP tools, and robust enterprise solutions.

IndustrySoftware - Application

SectorTechnology

Employees45

Annual revenue₹20 Cr

How does it make money?

Turns over ₹20 Cr a year. Of every ₹100 of sales, about ₹54 reaches shareholders as profit, with ₹76 left at the operating level before interest, tax and depreciation. Each of its 45 employees supports ₹43.7 lakh of revenue a year, the signature of a people-led business.

EBITDA margin75.8%

Net margin54.1%

Revenue / employee₹43.7 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?Some evidence

ROCE of 34.7% is above what capital typically costs, which suggests some pricing power, though not yet the sustained, wide gap that marks a durable advantage.

ROCE34.7%

ROE25.7%

Peer median ROE32.0%

What has been driving growth?

Sales and margins have both contributed to where profit is now. Over 3 years revenue moved +611% while net margin moved +575% 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+611%

Margin effect+575%

DalalBaazaar Score

75/ 100

Good

Weighted across six categories. Every point is explained below.

• Beta of 0.97 — moves roughly with the market
✗ Micro Cap: thinner liquidity and sharper drawdowns are normal
✗ High leverage magnifies any downturn in earnings
✗ Profits have swung sharply from year to year — earnings are hard to forecast
✗ Negative free cash flow means dependence on external funding

Quality vs. Valuation

Company Quality

81/ 100

Excellent

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

Valuation

75/ 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

14.1x

3Y Median

119.6x

40 monthly readings · mean 122.3x · range 19.4x–237.6x

Sector Median

16.5x

median of 4 sector peers

🟢Current valuation is approximately 88% below its 3y median of 119.6x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

🟢Against its sector it trades 15% below the peer median of 16.5x.

vs. its own history

Cheap

119.6x median over 40 months · -88%

vs. sector peers

Fair

16.5x median of 4 peers · -15%

vs. generic bands

Cheap

Below 15x

P/E (Trailing)

14.1x

P/B

4.99x

EV/EBITDA

13.9x

PEG

0.05

Dividend Yield

None

What's Good / What's Bad

🟢 What's Going Well7

Margins are improving
EBITDA margin is up from 43.3% to 75.8% over 3 years.
Debt is being paid down
Total debt is down 75% over 3 years.
Return on equity is rising
ROE has improved from 1.9% to 25.7%.
Return on capital is rising
ROCE has improved from 2.6% to 34.7%.
High return on capital employed
ROCE of 34.7% is the mark of a business that converts capital into profit efficiently.
Valuation below its historical average
At 14.1x the stock trades 88% below its own median of 119.6x.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention1

Free cash flow is negative
The business is not currently covering its capital spending from operations.

Red Flags

4 items require attention · 3 high · 1 watch

🔴High leverageFinancial
Debt/Equity of 3.90x — earnings must service borrowings before shareholders see anything.
🔴Free cash flow negative for 4 yearsFinancial
The business has not covered its capital spending from operations for several years running, which has to be funded externally.
🔴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.
🟡Shareholders have been dilutedOwnership
Shares outstanding are up 134% over 3 years — each existing share owns a smaller slice of the company.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 34.7% 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.
Margin expansion has further to run
EBITDA margin has risen from 43.3% to 75.8%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Deleveraging frees up earnings
Debt is down 75% over 3 years. Every rupee of interest not paid drops to the bottom line, so profit can grow even if revenue does not.
Priced below its own history
The stock trades 88% below its own median multiple. If the business performs as it has and simply re-rates back to normal, that gap is return on its own.
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?

Leverage amplifies any setback
Debt/Equity of 3.90x. Interest is payable whether or not the business has a good year.
Earnings are hard to forecast
Profit has swung sharply from year to year, so any single year — good or bad — is a weak guide to the next. Cyclical earnings deserve lower multiples for that reason.
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
3 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 69% a year✓ 92.3% CAGR
Latest reported year was 328.8%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 74%✓ 75.8%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✗ -₹3 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 0.1x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 32%✓ 34.7%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

9 / 11 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
✓ Short-term technical trend isn't bearish

Price history

Quick Metrics

6 good · 3 neutral · 2 weak

Market Cap

₹206 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

14.1x

Cheap

Cheap against the generic band

P/B Ratio

4.99x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹2.37

Profitable

Profitable on a per-share basis

ROE

25.7%

Strong

Strong capital efficiency

ROCE

34.7%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

3.90x

High

High leverage

Revenue Growth (YoY)

328.8%

Healthy

Healthy top-line growth

Profit Growth (YoY)

2161.1%

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

-₹3 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

CMP

₹33.32

Operating Margin

83.4%

Good

Healthy core-business profitability

Net Margin

59.1%

Good

Strong bottom-line conversion

Current Ratio

5.71

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.97

Market-like

Moves roughly in line with the market

52W Range Position

70%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

35.3 / 33.2

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

41.4

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹3 Cr	₹4 Cr	₹5 Cr	₹20 Cr	+92.3%
EBITDA	₹1 Cr	₹2 Cr	₹2 Cr	₹15 Cr	+131.8%
EBITDA Margin	43.3%	36.6%	28.9%	75.8%	—
PAT (Net Profit)	₹0 Cr	₹1 Cr	₹1 Cr	₹11 Cr	+263.5%
EPS	₹0.08	₹0.23	₹0.12	₹1.72	+175.9%
ROE	1.9%	5.1%	2.9%	25.7%	—
ROCE	2.6%	7.0%	4.1%	34.7%	—
Total Debt	₹6 Cr	₹8 Cr	₹1 Cr	₹2 Cr	-36.7%
Free Cash Flow	-₹1 Cr	-₹2 Cr	-₹2 Cr	-₹3 Cr	—

🟢 Revenue has grown at 92.3% a year over 3 years.

🟢 EBITDA has grown at 131.8% a year over 3 years.

🟢 EBITDA Margin has risen from 43.3% to 75.8% over 3 years (+32.5 pts).

🟢 PAT (Net Profit) has grown at 263.5% a year over 3 years.

🟢 EPS has grown at 175.9% a year over 3 years.

🟢 ROE has risen from 1.9% to 25.7% over 3 years (+23.8 pts).

🟢 ROCE has risen from 2.6% to 34.7% over 3 years (+32.1 pts).

🟢 Total Debt has shrunk at 36.7% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹50 Cr

Total Liabilities

₹8 Cr

Total Debt

₹2 Cr

Cash & Equivalents

₹0 Cr

Operating Cash Flow

-₹3 Cr

Capex

-₹0 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

28.8%

Corporate Actions

Ex-Dividend Date

09 Sept 2010

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

1 positive1 mixed4 general

California Software profit rises to ₹411.64 lakh in Q1FY27

scanx.trade, 15 OctResults

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

California Software's (NSE:CALSOFT) Solid Profits Have Weak Fundamentals

Simply Wall Street, 07 May

California Software Company Ltd. Lower Circuit: Price and Key Data

Univest, 29 Sept

California Software Company Ltd leads gainers in 'B' group

Business Standard, 30 Apr

California Software Company Share Price Target 2027, 2028 and 2030: Long Term Analyst Forecast

Univest, 06 AugAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

California Software Company Limited's (NSE:CALSOFT) Stock is Soaring But Financials Seem Inconsistent: Will The Uptrend Continue?

Simply Wall Street, 01 Jan

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

🟢Business QualityStrong17.9/20

🟡Financial HealthAdequate10.4/20

🟢GrowthStrong18.5/20

🟢ProfitabilityStrong13.5/15

🟢ValuationAttractive11.8/15

🔴RiskHigh3.3/10

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. 3 high-severity red flags sit above this conclusion and should be read first.

This thesis breaks if

✓Revenue growth stays above 69% a year92.3% CAGR
✓EBITDA margin holds above 74%75.8%
✗Free cash flow remains positive-₹3 Cr
✓Debt / EBITDA stays below 2x0.1x
✓ROCE stays above 32%34.7%