CSM Technologies Limited

Technology — Information Technology Services · NSE

₹88.00+₹1.02 (+1.17%)

DalalBaazaar Score

53 / 100

🟡 Moderate

Verdict

NEUTRAL

Risk

High

Driven by 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. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:04 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 CSM Technologies Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

CSM Technologies Limited provides information technology (IT) consulting and software development services in India and internationally. The company specializes in providing government technology solutions and digital transformation services.

IndustryInformation Technology Services

SectorTechnology

Annual revenue₹199 Cr

How does it make money?

Turns over ₹199 Cr a year. Of every ₹100 of sales, about ₹7 reaches shareholders as profit, with ₹16 left at the operating level before interest, tax and depreciation.

EBITDA margin15.7%

Net margin7.1%

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?The numbers suggest a real one

ROCE has stayed above 15% in every year available and stands at 22.2%. Returns that high normally get competed away; when they persist, something is protecting them, and its ROE of 18.3% against a peer median of 32.0% is consistent with that. What that something is — brand, scale, switching costs, regulation — the accounts cannot tell you.

ROCE22.2%

ROE18.3%

Peer median ROE32.0%

What has been driving growth?

Sales and margins have both contributed to where profit is now. Over 2 years revenue moved +24% while net margin moved -28% 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+24%

Margin effect-28%

DalalBaazaar Score

53/ 100

Moderate

Weighted across six categories. Every point is explained below.

• Revenue CAGR of 11.4% is steady
✗ Profit has declined at 5.7% a year
✗ Profit is compounding slower than revenue — margins are being squeezed as the business grows

Quality vs. Valuation

Company Quality

54/ 100

Average

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

Valuation

30/ 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

35.8x

Sector Median

16.5x

median of 4 sector peers

⚠️Against its sector it trades 116% above the peer median of 16.5x.

vs. its own history

Not enough price and earnings history

vs. sector peers

Expensive

16.5x median of 4 peers · +116%

vs. generic bands

Expensive

Above 35x

P/E (Trailing)

35.8x

P/B

3.32x

EV/EBITDA

15.6x

PEG

2.92

Dividend Yield

0.57%

What's Good / What's Bad

🟢 What's Going Well1

High return on capital employed
ROCE of 22.2% is the mark of a business that converts capital into profit efficiently.

🔴 What Needs Attention6

Margins are compressing
EBITDA margin has slipped from 18.3% to 15.7% over 2 years.
Debt is rising
Total debt is up 284% over 2 years — worth checking what it funded.
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 31.5% to 18.3% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 39.3% to 22.2% — often a sign of competition or overexpansion.
Receivables growing faster than sales
Receivables are up 176% against revenue growth of 24% — customers are taking longer to pay.

Red Flags

4 items require attention · 2 high · 2 watch

🔴Debt has risen sharplyFinancial
Total debt is up 284% over 2 years, from ₹9 Cr to ₹35 Cr.
🔴Receivables growing faster than salesFinancial
Receivables up 176% against revenue up 24% — sales are being booked faster than they are collected.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹2 Cr in the latest year.
🟡Margins are compressingFinancial
EBITDA margin is down 2.6 points over 2 years.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 22.2% 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.

🔴 Bear CaseWhat could go wrong?

Margins are being competed away
EBITDA margin has fallen from 18.3% to 15.7%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
Sales are being booked faster than collected
Receivables are up 176% against revenue up 24%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
A premium to the sector to defend
It trades 116% above the peer median. That premium needs a reason that persists, or it closes.
Returns on shareholder capital are falling
ROE has dropped from 31.5% to 18.3%. 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.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 9% a year✓ 11.4% CAGR
Latest reported year was 21.2%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 14%✓ 15.7%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✗ -₹2 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 1.1x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 19%✓ 22.2%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

8 / 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

5 good · 5 neutral · 1 weak

Market Cap

₹454 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

35.8x

Fair

Fairly valued against the generic band

P/B Ratio

3.32x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹2.46

Profitable

Profitable on a per-share basis

ROE

18.3%

Strong

Strong capital efficiency

ROCE

22.2%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

0.70x

Moderate

Moderate leverage

Revenue Growth (YoY)

21.2%

Healthy

Healthy top-line growth

Profit Growth (YoY)

12.2%

Healthy

Profits growing at a healthy clip

Dividend Yield

0.57%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

-₹2 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

CMP

₹88

Operating Margin

-21.2%

Weak

Thin margins leave little room for error

Net Margin

9.8%

Average

Average bottom-line conversion

Current Ratio

1.90

Comfortable

Healthy short-term liquidity

52W Range Position

30%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

96.2 / 97.0

Bearish alignment (short < long)

RSI (14)

17.9

Oversold zone

Financial Trend (3-Year)

Metric	FY23	FY24	FY25	2Y CAGR
Revenue	₹160 Cr	₹197 Cr	₹199 Cr	+11.4%
EBITDA	₹29 Cr	₹26 Cr	₹31 Cr	+3.1%
EBITDA Margin	18.3%	13.2%	15.7%	—
PAT (Net Profit)	₹16 Cr	₹13 Cr	₹14 Cr	-5.7%
EPS	₹3.07	₹2.43	₹2.73	-5.6%
ROE	31.5%	21.0%	18.3%	—
ROCE	39.3%	22.9%	22.2%	—
Total Debt	₹9 Cr	₹34 Cr	₹35 Cr	+95.9%
Free Cash Flow	₹8 Cr	-₹20 Cr	-₹2 Cr	—

🟢 Revenue has grown at 11.4% a year over 2 years.

🟢 EBITDA has grown at 3.1% a year over 2 years.

🔴 EBITDA Margin has fallen from 18.3% to 15.7% over 2 years (-2.6 pts).

🔴 PAT (Net Profit) has shrunk at 5.7% a year over 2 years.

🔴 EPS has shrunk at 5.6% a year over 2 years.

🔴 ROE has fallen from 31.5% to 18.3% over 2 years (-13.2 pts).

🔴 ROCE has fallen from 39.3% to 22.2% over 2 years (-17.1 pts).

🔴 Total Debt has grown at 95.9% a year over 2 years.

🔴 Free Cash Flow has turned negative, from ₹8 Cr to -₹2 Cr.

Balance Sheet & Cash Flow — FY2025

Total Assets

₹155 Cr

Total Liabilities

₹78 Cr

Total Debt

₹35 Cr

Cash & Equivalents

₹1 Cr

Operating Cash Flow

₹9 Cr

Capex

-₹11 Cr

Shareholding (proxy)

Institutional Holding

2.6%

Insider Holding

81.0%

Corporate Actions

Dividend Rate

₹0.5

Ex-Dividend Date

22 Sept 2026

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

6 general

CSM TECHNOLOGIES LIMITED Share Price

Upstox, 16 Oct

CSM Technologies IPO to Open on June 24: Price Band, Issue Size, Timeline & Key Details

Groww, 18 Jun

Compare with

Equitymaster, 15 Oct

CSM Technologies shares list flat at IPO price of Rs 113 on BSE, NSE

The Economic Times, 02 Jul

CSM Technologies Share Price news with sector comparison

Univest, 15 Sept

CSM Technologies makes flat market debut; what should investors do?

Business Standard, 02 Jul

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.
RSI is in oversold territory — could mean either a bargain or a stock still falling for good reason. Check the 'why' before assuming reversal.

DalalBaazaar Thesis

🟡Business QualityAdequate12.6/20

🟡Financial HealthAdequate12/20

🔴GrowthWeak7.7/20

🟡ProfitabilityModerate8.4/15

🟡ValuationFair7.5/15

🔴RiskHigh4.3/10

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 9% a year11.4% CAGR
✓EBITDA margin holds above 14%15.7%
✗Free cash flow remains positive-₹2 Cr
✓Debt / EBITDA stays below 2x1.1x
✓ROCE stays above 19%22.2%