Danube Industries Limited

Technology — Electronics & Computer Distribution · BSE

₹4.97+₹0.17 (+3.54%)

DalalBaazaar Score

53 / 100

🟡 Moderate

Verdict

CAUTION

Risk

High

Driven by moderate debt load, negative free cash flow, micro-cap size, which brings thin liquidity.

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

Decision support, not a buy or sell call.

As of 18 Oct 2026, 8:27 pm

Understanding the Business

Company site ↗

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

What does this company do?

Danube Industries Limited trades in computer accessories and mobile phones in India.

IndustryElectronics & Computer Distribution

SectorTechnology

Annual revenue₹115 Cr

How does it make money?

Turns over ₹115 Cr a year. Of every ₹100 of sales, about ₹1 reaches shareholders as profit, with ₹4 left at the operating level before interest, tax and depreciation.

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.

Compared side by side in Peers ↓

What is its competitive advantage?Little sign of one

Returns on capital of 11.8% 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.

Peer median ROE32.0%

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 +67% 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+67%

Margin effect+8%

DalalBaazaar Score

53/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ ROE of 3.8% is weak

Quality vs. Valuation

Company Quality

50/ 100

Average

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

Valuation

47/ 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.

Historical Valuation

Current P/E

33.1x

3Y Median

28.9x

40 monthly readings · mean 29.0x · range 18.4x–46.8x

Sector Median

16.5x

median of 4 sector peers

⚠️Current valuation is approximately 15% above its 3y median of 28.9x. 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 100% above the peer median of 16.5x.

vs. its own history

Fair

28.9x median over 40 months · +15%

vs. sector peers

Expensive

16.5x median of 4 peers · +100%

vs. generic bands

Fair

15x–35x

EV/EBITDA

17.6x

PEG

1.54

What's Good / What's Bad

🟢 What's Going Well3

Margins are improving
EBITDA margin is up from 2.2% to 3.8% over 3 years.
Return on capital is rising
ROCE has improved from 6.1% to 11.8%.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention0

Nothing stands out as clearly deteriorating on the years of data available.

Red Flags

7 items require attention · 6 high · 1 watch

🔴Debt has risen sharplyFinancial
Total debt is up 69% over 3 years, from ₹19 Cr to ₹33 Cr.
🔴Thin interest coverageFinancial
Operating profit covers interest only 1.8x — little room if earnings dip.
🔴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.
🔴Receivables growing faster than salesFinancial
Receivables up 196% against revenue up 67% — sales are being booked faster than they are collected.
🔴Inventory building faster than salesFinancial
Inventory up 324% against revenue up 67% — stock may not be moving.
🟡Shareholders have been dilutedOwnership
Shares outstanding are up 52% over 3 years — each existing share owns a smaller slice of the company.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Margin expansion has further to run
EBITDA margin has risen from 2.2% to 3.8%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
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?

The debt load needs earnings to hold up
Debt is 7.4x EBITDA. At that level a downturn in earnings turns a manageable balance sheet into a refinancing problem, and lenders get paid before shareholders.
Sales are being booked faster than collected
Receivables are up 196% against revenue up 67%. 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 100% above the peer median. That premium needs a reason that persists, or it closes.
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
6 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 14% a year✓ 18.6% CAGR
Latest reported year was -32.2%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 2%✓ 3.8%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Debt / EBITDA falls below 3x✗ 7.4x
Already stretched, so this is a reduction target rather than a level to hold. Around 3x is where lenders typically start attaching conditions.
4Free cash flow remains positive✗ -₹17 Cr
Profit that never becomes cash eventually stops being profit.
5Interest cover stays above 3x✗ 1.8x
How much operating profit can fall before interest stops being comfortably covered.

Investment Checklist

4 / 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

2 good · 6 neutral · 3 weak

Market Cap

₹45 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

33.1x

Fair

Fairly valued against the generic band

P/B Ratio

1.21x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹0.15

Profitable

Profitable on a per-share basis

ROE

3.8%

Weak

Weak capital efficiency

ROCE

11.8%

Moderate

Moderate return on the capital in the business

Debt/Equity

0.92x

Moderate

Moderate leverage

Revenue Growth (YoY)

-32.2%

Shrinking

Sales are contracting

Profit Growth (YoY)

0.0%

Modest

Slow profit growth

Dividend Yield

None

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

Free Cash Flow

-₹17 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

Operating Margin

6.2%

Average

Average margins

Net Margin

1.2%

Weak

Very little revenue reaches the bottom line

Current Ratio

1.41

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

-0.17

Defensive

Steadier than the market

52W Range Position

28%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

4.9 / 5.5

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

52.7

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹69 Cr	₹87 Cr	₹110 Cr	₹115 Cr	+18.6%
EBITDA	₹2 Cr	₹3 Cr	₹3 Cr	₹4 Cr	+42.7%
EBITDA Margin	2.2%	3.0%	2.8%	3.8%	—
PAT (Net Profit)	₹1 Cr	₹1 Cr	₹1 Cr	₹1 Cr	+21.6%
EPS	₹0.25	₹0.16	₹0.19	₹0.15	-15.7%
ROE	4.9%	5.9%	3.6%	3.8%	—
ROCE	6.1%	15.2%	8.6%	11.8%	—
Total Debt	₹19 Cr	₹10 Cr	₹13 Cr	₹33 Cr	+19.2%
Free Cash Flow	-₹9 Cr	-₹4 Cr	-₹18 Cr	-₹17 Cr	—

🟢 Revenue has grown at 18.6% a year over 3 years.

🟢 EBITDA has grown at 42.7% a year over 3 years.

🟢 EBITDA Margin has risen from 2.2% to 3.8% over 3 years (+1.6 pts).

🟢 PAT (Net Profit) has grown at 21.6% a year over 3 years.

🔴 EPS has shrunk at 15.7% a year over 3 years.

🔴 ROE has fallen from 4.9% to 3.8% over 3 years (-1.1 pts).

🟢 ROCE has risen from 6.1% to 11.8% over 3 years (+5.7 pts).

🔴 Total Debt has grown at 19.2% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹112 Cr

Total Liabilities

₹77 Cr

Cash & Equivalents

₹0 Cr

Operating Cash Flow

-₹17 Cr

Capex

—

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

63.9%

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 mixed1 negative4 general

Danube Industries (BSE:540361) - Stock Analysis

Simply Wall Street, 15 Oct

Danube Industries Ltd. Shareholding Pattern – Promoters, FIIs & DIIs

Value Research, 27 Aug

Danube Industries Plans Strategic Tie-Up With Shree Info Solutions to Drive Business Growth

scanx.trade, 15 JulPartnership

🟡Mixed / dependsA partnership, whose value depends entirely on terms that a headline will not carry. Worth reading the filing before assuming either way.

Danube Industries standalone net profit declines 16.67% in the June 2026 quarter

Business Standard, 15 AugResults

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

Danube Industries Ltd. Key Financial Ratios – Valuation, Profitability & More

Value Research, 29 Aug

Danube Industries to get ₹472 crore investment from Fox Petroleum Group

BusinessLine, 22 Jun

Watch Items

Revenue growth is negative (-32.2%) 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.

DalalBaazaar Thesis

StrongGrowth

MiddlingBusiness Quality · Valuation · Risk

WeakFinancial Health · Profitability

Points for each in the Score ↑

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

3 of 5 tripwires tripped — Debt / EBITDA falls below 3x; Free cash flow remains positive; Interest cover stays above 3x · see Key things to watch ↑