De Neers Tools Limited

Sector n/a · NSE

₹199.00−₹1.00 (−0.50%)

DalalBaazaar Score

71 / 100

🟢 Good

Verdict

REASONABLE

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, 7:49 pm

Understanding the Business

The 60-second version of De Neers Tools 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 ₹178 Cr a year. Of every ₹100 of sales, about ₹14 reaches shareholders as profit, with ₹22 left at the operating level before interest, tax and depreciation.

What is its competitive advantage?The numbers suggest a real one

ROCE has stayed above 15% in every year available and stands at 29.6%. Returns that high normally get competed away; when they persist, something is protecting them. What that something is — brand, scale, switching costs, regulation — the accounts cannot tell you.

What has been driving growth?

Sales and margins have both contributed to where profit is now. Over 3 years revenue moved +87% while net margin moved +94% 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+87%

Margin effect+94%

DalalBaazaar Score

71/ 100

Good

Weighted across six categories. Every point is explained below.

✗ Micro Cap: thinner liquidity and sharper drawdowns are normal
✗ Negative free cash flow means dependence on external funding

Quality vs. Valuation

Company Quality

82/ 100

Excellent

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

Valuation

88/ 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.

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

EV/EBITDA

6.3x

PEG

—

What's Good / What's Bad

🟢 What's Going Well5

Margins are improving
EBITDA margin is up from 12.5% to 21.8% over 3 years.
Return on equity is rising
ROE has improved from 20.7% to 26.5%.
Return on capital is rising
ROCE has improved from 16.3% to 29.6%.
High return on capital employed
ROCE of 29.6% is the mark of a business that converts capital into profit efficiently.
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

2 items require attention · 1 high · 1 watch

🔴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.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹12 Cr in the latest year.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 29.6% 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 12.5% to 21.8%. 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?

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 17% a year✓ 23.3% CAGR
Latest reported year was 23.0%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 20%✓ 21.8%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✗ -₹12 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 1.9x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 27%✓ 29.6%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

8 / 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

4 good · 6 neutral · 1 weak

Market Cap

₹171 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

26.5%

Strong

Strong capital efficiency

ROCE

29.6%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

0.77x

Moderate

Moderate leverage

Revenue Growth (YoY)

23.0%

Healthy

Healthy top-line growth

Profit Growth (YoY)

60.0%

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

-₹12 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

Gross Margin

32.1%

Proxy

Operating margin unavailable — showing gross margin instead

Net Margin

14.2%

Good

Strong bottom-line conversion

Current Ratio

2.60

Comfortable

Healthy short-term liquidity

Technical Snapshot

SMA 20 / SMA 50

172.0 / 171.5

Bullish alignment (short > long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

27.9

Oversold zone

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹95 Cr	₹110 Cr	₹145 Cr	₹178 Cr	+23.3%
EBITDA	₹12 Cr	₹15 Cr	₹26 Cr	₹39 Cr	+48.2%
EBITDA Margin	12.5%	13.4%	17.9%	21.8%	—
PAT (Net Profit)	₹7 Cr	₹9 Cr	₹16 Cr	₹25 Cr	+53.8%
EPS	₹8.06	₹10.36	₹18.33	—	—
ROE	20.7%	13.3%	22.3%	26.5%	—
ROCE	16.3%	15.9%	26.7%	29.6%	—
Total Debt	₹61 Cr	₹58 Cr	₹57 Cr	₹73 Cr	+6.5%
Free Cash Flow	-₹26 Cr	-₹17 Cr	₹16 Cr	-₹12 Cr	—

🟢 Revenue has grown at 23.3% a year over 3 years.

🟢 EBITDA has grown at 48.2% a year over 3 years.

🟢 EBITDA Margin has risen from 12.5% to 21.8% over 3 years (+9.2 pts).

🟢 PAT (Net Profit) has grown at 53.8% a year over 3 years.

🟢 ROE has risen from 20.7% to 26.5% over 3 years (+5.8 pts).

🟢 ROCE has risen from 16.3% to 29.6% over 3 years (+13.3 pts).

🔴 Total Debt has grown at 6.5% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹207 Cr

Total Liabilities

₹111 Cr

Cash & Equivalents

₹1 Cr

Operating Cash Flow

-₹12 Cr

Capex

-₹0 Cr

Recent News

6 general

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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.
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

StrongBusiness Quality · Financial Health · Growth · Profitability

MiddlingValuation

WeakRisk

Points for each in the Score ↑

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. 1 high-severity red flag sits above this conclusion and should be read first.

1 of 5 tripwires tripped — Free cash flow remains positive · see Key things to watch ↑