Chennai Ferrous Industries Limited

Basic Materials — Steel · BSE

₹73.50−₹0.99 (−1.33%)

DalalBaazaar Score

45 / 100

🟡 Moderate

Verdict

CAUTION

Risk

Moderate

Driven by micro-cap size, which brings thin liquidity, 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, 6:08 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 Chennai Ferrous Industries Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Chennai Ferrous Industries Limited engages in the trading of iron and coal-related products in India. It also leases sponge iron plant. The company was incorporated in 2010 and is based in Gummidipoondi, India.

IndustrySteel

SectorBasic Materials

Employees6

Annual revenue₹132 Cr

How does it make money?

Turns over ₹132 Cr a year. Of every ₹100 of sales, about ₹3 reaches shareholders as profit, with ₹2 left at the operating level before interest, tax and depreciation. Each of its 6 employees supports ₹22.05 Cr of revenue a year, the signature of a capital- or asset-led business.

EBITDA margin1.7%

Net margin2.6%

Revenue / employee₹22.05 Cr

Who are its competitors?

The closest listed comparisons in its industry are TATA STEEL LIMITED, JSW STEEL LIMITED, JINDAL STEEL LIMITED, STEEL AUTHORITY OF INDIA. These are the companies its valuation and returns are measured against elsewhere in this report.

TATA STEEL LIMITEDP/E 19.8x · ROE 10.8%

JSW STEEL LIMITEDP/E 12.0x · ROE 24.7%

JINDAL STEEL LIMITEDP/E 39.1x · ROE 5.3%

STEEL AUTHORITY OF INDIAP/E 16.5x · ROE 7.1%

What is its competitive advantage?Little sign of one

Returns on capital of 3.3% 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.

ROCE3.3%

ROE6.1%

Peer median ROE10.8%

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved -5% 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-5%

Margin effect+8%

DalalBaazaar Score

45/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Revenue has contracted at 1.6% a year
✗ Profit CAGR of only 0.9%
✗ Latest-year revenue growth of -98.6% is below the longer-term trend — momentum is fading
✗ Profit fell 15.7% in the latest year

Quality vs. Valuation

Company Quality

45/ 100

Average

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

Valuation

34/ 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

46.2x

3Y Median

13.2x

40 monthly readings · mean 12.5x · range 5.3x–19.6x

Sector Median

18.2x

median of 4 sector peers

⚠️Current valuation is approximately 250% above its 3y median of 13.2x. 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 154% above the peer median of 18.2x.

vs. its own history

Expensive

13.2x median over 40 months · +250%

vs. sector peers

Expensive

18.2x median of 4 peers · +154%

vs. generic bands

Expensive

Above 35x

P/E (Trailing)

46.2x

P/B

0.48x

EV/EBITDA

10.5x

PEG

52.25

Dividend Yield

None

What's Good / What's Bad

🟢 What's Going Well1

Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention3

Margins are compressing
EBITDA margin has slipped from 4.1% to 1.7% over 3 years.
Return on capital is falling
ROCE has declined from 6.4% to 3.3% — often a sign of competition or overexpansion.
Valuation above its historical average
At 46.2x the stock trades 250% above its own median of 13.2x.

Red Flags

1 item require attention · 1 watch

🟡Margins are compressingFinancial
EBITDA margin is down 2.4 points 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 4.1% to 1.7%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
The price already assumes success
The stock trades 250% 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

1EBITDA margin holds above 0%✓ 1.7%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Free cash flow remains positive✓ ₹3 Cr
Profit that never becomes cash eventually stops being profit.
3ROCE stays above 8%✗ 3.3%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.
4Valuation vs its own median of 13.2x✗ 46.2x 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

3 good · 3 neutral · 5 weak

Market Cap

₹26 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

46.2x

Expensive

Expensive — verify against sector peers

P/B Ratio

0.48x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹1.59

Profitable

Profitable on a per-share basis

ROE

6.1%

Weak

Weak capital efficiency

ROCE

3.3%

Weak

Low return on total capital employed

Debt/Equity

Not available

No data

Source didn't return this field

Revenue Growth (YoY)

-98.6%

Shrinking

Sales are contracting

Profit Growth (YoY)

-15.7%

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

₹3 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

CMP

₹73.5

Operating Margin

-78.8%

Weak

Thin margins leave little room for error

Net Margin

0.9%

Weak

Very little revenue reaches the bottom line

Current Ratio

3.04

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.80

Market-like

Moves roughly in line with the market

52W Range Position

20%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

71.3 / 74.8

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

50.0

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹139 Cr	₹136 Cr	₹221 Cr	₹132 Cr	-1.6%
EBITDA	₹6 Cr	₹6 Cr	₹6 Cr	₹2 Cr	-26.7%
EBITDA Margin	4.1%	4.7%	2.9%	1.7%	—
PAT (Net Profit)	₹3 Cr	₹3 Cr	₹4 Cr	₹3 Cr	+0.9%
EPS	₹9.14	₹7.74	₹11.13	₹9.38	+0.9%
ROE	7.3%	5.8%	7.7%	6.1%	—
ROCE	6.4%	9.4%	10.1%	3.3%	—
Free Cash Flow	₹8 Cr	-₹3 Cr	-₹8 Cr	₹3 Cr	-26.7%

🟡 Revenue has been broadly flat over 3 years (-1.6% a year).

🔴 EBITDA has shrunk at 26.7% a year over 3 years.

🔴 EBITDA Margin has fallen from 4.1% to 1.7% over 3 years (-2.4 pts).

🟡 PAT (Net Profit) has been broadly flat over 3 years (0.9% a year).

🟡 EPS has been broadly flat over 3 years (0.9% a year).

🔴 ROE has fallen from 7.3% to 6.1% over 3 years (-1.2 pts).

🔴 ROCE has fallen from 6.4% to 3.3% over 3 years (-3.1 pts).

🔴 Free Cash Flow has shrunk at 26.7% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹69 Cr

Total Liabilities

₹14 Cr

Total Debt

—

Cash & Equivalents

₹3 Cr

Operating Cash Flow

₹3 Cr

Capex

—

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

76.3%

Peer Comparison

Company	P/E	ROE
TATA STEEL LIMITED	19.8x	10.8%
JSW STEEL LIMITED	12.0x	24.7%
JINDAL STEEL LIMITED	39.1x	5.3%
STEEL AUTHORITY OF INDIA	16.5x	7.1%

Recent News

1 positive1 mixed1 negative3 general

Chennai Ferrous closes trading window from Oct 1 for Q2FY27 results

scanx.trade, 27 SeptResults

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

Chennai Ferrous Industries Ltd. Financials – Balance Sheet, Profit & Loss, Cash Flow

Value Research, 30 Aug

Chennai Ferrous AGM resolutions pass with over 99% votes in favour

scanx.trade, 25 Sept

JINDAL SUPREME (INDIA) LTD. Stock/Share price , NSE/BSE Forecast News and Live Quotes

Equitymaster, 24 Sept

Chennai Ferrous FY26 net profit falls, revenue drops

scanx.trade, 29 MayResults

🔴Potentially negativeReported deterioration, which feeds the growth and margin inputs on this page directly.

Hardwyn India standalone net profit rises 96.55% in the March 2026 quarter

Business Standard, 30 MayResults

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

Watch Items

Revenue growth is negative (-98.6%) on the latest reported period — check if this is one-off or a trend.
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.

DalalBaazaar Thesis

🔴Business QualityWeak5.9/20

🟢Financial HealthStrong17.5/20

🔴GrowthWeak5.7/20

🔴ProfitabilityWeak4.5/15

🔴ValuationDemanding6.2/15

🟡RiskModerate5.4/10

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.

This thesis breaks if

✓EBITDA margin holds above 0%1.7%
✓Free cash flow remains positive₹3 Cr
✗ROCE stays above 8%3.3%
✗Valuation vs its own median of 13.2x46.2x today