Canarys Automations Limited

Sector n/a · NSE

₹54.10+₹0.50 (+0.93%)

DalalBaazaar Score

52 / 100

🟡 Moderate

Verdict

NEUTRAL

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

The 60-second version of Canarys Automations 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 ₹198 Cr a year. Of every ₹100 of sales, about ₹6 reaches shareholders as profit, with ₹12 left at the operating level before interest, tax and depreciation.

EBITDA margin11.9%

Net margin6.2%

What is its competitive advantage?Some evidence

ROCE of 19.7% is above what capital typically costs, which suggests some pricing power, though not yet the sustained, wide gap that marks a durable advantage.

ROCE19.7%

ROE11.9%

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 +166% while net margin moved -46% 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+166%

Margin effect-46%

DalalBaazaar Score

52/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Micro Cap: thinner liquidity and sharper drawdowns are normal
✗ High leverage magnifies any downturn in earnings
✓ Profits have been consistent from year to year
✗ Negative free cash flow means dependence on external funding

Quality vs. Valuation

Company Quality

54/ 100

Average

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

Valuation

60/ 100

Fair

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.

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

P/E (Trailing)

—

P/B

—

EV/EBITDA

13.5x

PEG

—

Dividend Yield

None

What's Good / What's Bad

🟢 What's Going Well2

Debt is being paid down
Total debt is down 32% over 3 years.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention4

Margins are compressing
EBITDA margin has slipped from 18.3% to 11.9% over 3 years.
Free cash flow is negative
The business is not currently covering its capital spending from operations.
Return on equity is falling
ROE has dropped from 33.6% to 11.9% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 50.8% to 19.7% — often a sign of competition or overexpansion.

Red Flags

3 items require attention · 2 high · 1 watch

🔴High leverageFinancial
Debt/Equity of 9.32x — earnings must service borrowings before shareholders see anything.
🔴Significant margin compressionFinancial
EBITDA margin has fallen 6.4 points, from 18.3% to 11.9%.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹23 Cr in the latest year.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 19.7% 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.
Deleveraging frees up earnings
Debt is down 32% over 3 years. Every rupee of interest not paid drops to the bottom line, so profit can grow even if revenue does not.
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 18.3% to 11.9%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
Leverage amplifies any setback
Debt/Equity of 9.32x. Interest is payable whether or not the business has a good year.
Returns on shareholder capital are falling
ROE has dropped from 33.6% to 11.9%. 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 29% a year✓ 38.5% CAGR
Latest reported year was 122.4%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 10%✓ 11.9%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✗ -₹23 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 0.4x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 17%✓ 19.7%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

5 / 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

3 good · 6 neutral · 2 weak

Market Cap

₹318 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

11.9%

Moderate

Moderate capital efficiency

ROCE

19.7%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

9.32x

High

High leverage

Revenue Growth (YoY)

122.4%

Healthy

Healthy top-line growth

Profit Growth (YoY)

48.6%

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

-₹23 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

CMP

₹54.1

Gross Margin

24.4%

Proxy

Operating margin unavailable — showing gross margin instead

Net Margin

6.2%

Average

Average bottom-line conversion

Current Ratio

2.87

Comfortable

Healthy short-term liquidity

Technical Snapshot

SMA 20 / SMA 50

28.1 / 25.5

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

32.6

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹75 Cr	₹75 Cr	₹89 Cr	₹198 Cr	+38.5%
EBITDA	₹14 Cr	₹12 Cr	₹13 Cr	₹24 Cr	+20.0%
EBITDA Margin	18.3%	16.1%	14.2%	11.9%	—
PAT (Net Profit)	₹9 Cr	₹8 Cr	₹8 Cr	₹12 Cr	+13.1%
EPS	₹1.52	₹1.72	₹1.42	—	—
ROE	33.6%	11.0%	9.5%	11.9%	—
ROCE	50.8%	15.8%	14.1%	19.7%	—
Total Debt	₹14 Cr	₹8 Cr	₹7 Cr	₹10 Cr	-12.0%
Free Cash Flow	-₹6 Cr	-₹14 Cr	₹1 Cr	-₹23 Cr	—

🟢 Revenue has grown at 38.5% a year over 3 years.

🟢 EBITDA has grown at 20.0% a year over 3 years.

🔴 EBITDA Margin has fallen from 18.3% to 11.9% over 3 years (-6.4 pts).

🟢 PAT (Net Profit) has grown at 13.1% a year over 3 years.

🔴 ROE has fallen from 33.6% to 11.9% over 3 years (-21.7 pts).

🔴 ROCE has fallen from 50.8% to 19.7% over 3 years (-31.1 pts).

🟢 Total Debt has shrunk at 12.0% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹141 Cr

Total Liabilities

₹35 Cr

Total Debt

₹10 Cr

Cash & Equivalents

₹8 Cr

Operating Cash Flow

₹7 Cr

Capex

-₹29 Cr

Recent News

1 positive3 mixed2 general

Canarys Automations Ltd. Share Price update after 8.41% gain

Univest, 22 Sept

Canarys Automations Wins ₹9.85 Crore GNIDA Order; Shares Gain

HDFC Sky, 02 JulPrice 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.

Canarys Automations Ltd. Share Price Gains; Valuation View

Univest, 18 AugPrice 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.

Canarys Automations subsidiary secures $250,000 LinkedIn order

scanx.trade, 02 JunOrder win

🟢Potentially positiveAn order or contract win, which adds to future revenue. How much depends on its size against annual sales and on when it is executed.

Canarys Automations Share Price Falls 8.45% to Rs 29.25

Univest, 24 SeptPrice move

🟡Mixed / dependsA price move rather than a change in the business. If the figures on this page have not moved, the fall is either an opportunity or news they have yet to catch up with.

Canarys Automations (NSEI:CANARYS) - Stock Analysis

Simply Wall Street, 11 Oct

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

🔴Business QualityWeak8.8/20

🟡Financial HealthAdequate11.9/20

🟡GrowthModest12.9/20

🟡ProfitabilityModerate7.1/15

🟡ValuationFair7.5/15

🔴RiskHigh3.9/10

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

This thesis breaks if

✓Revenue growth stays above 29% a year38.5% CAGR
✓EBITDA margin holds above 10%11.9%
✗Free cash flow remains positive-₹23 Cr
✓Debt / EBITDA stays below 2x0.4x
✓ROCE stays above 17%19.7%