Desco Infratech Limited

Industrials — Engineering & Construction · BSE

₹176.00−₹2.50 (−1.40%)

DalalBaazaar Score

74 / 100

🟢 Good

Verdict

REASONABLE

Risk

Moderate

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, 7:48 pm

Understanding the Business

Company site ↗

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

What does this company do?

Desco Infratech Limited operates as an infrastructure company in India.

IndustryEngineering & Construction

SectorIndustrials

Employees361

Annual revenue₹119 Cr

How does it make money?

Turns over ₹119 Cr a year. Of every ₹100 of sales, about ₹14 reaches shareholders as profit, with ₹20 left at the operating level before interest, tax and depreciation. Each of its 361 employees supports ₹32.9 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹32.9 lakh

Who are its competitors?

The closest listed comparisons in its industry are LARSEN & TOUBRO LTD., ADANI PORT & SEZ LTD, SIEMENS 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?The numbers suggest a real one

ROCE has stayed above 15% in every year available and stands at 30.7%. Returns that high normally get competed away; when they persist, something is protecting them, and its ROE of 25.2% against a peer median of 14.1% is consistent with that. What that something is — brand, scale, switching costs, regulation — the accounts cannot tell you.

Peer median ROE14.1%

What has been driving growth?

Sales and margins have both contributed to where profit is now. Over 3 years revenue moved +306% while net margin moved +228% 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+306%

Margin effect+228%

DalalBaazaar Score

74/ 100

Good

Weighted across six categories. Every point is explained below.

✗ Micro Cap: thinner liquidity and sharper drawdowns are normal
✗ Profits have swung sharply from year to year — earnings are hard to forecast
✗ Negative free cash flow means dependence on external funding

Quality vs. Valuation

Company Quality

80/ 100

Excellent

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

Valuation

86/ 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.

Historical Valuation

Current P/E

8.3x

2Y Median

19.0x

20 monthly readings · mean 24.1x · range 12.5x–58.3x

Sector Median

30.1x

median of 3 sector peers

🟢Current valuation is approximately 56% below its 2y median of 19.0x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

🟢Against its sector it trades 73% below the peer median of 30.1x.

vs. its own history

Cheap

19.0x median over 20 months · -56%

vs. sector peers

Cheap

30.1x median of 3 peers · -73%

vs. generic bands

Cheap

Below 15x

EV/EBITDA

6.5x

PEG

0.06

What's Good / What's Bad

🟢 What's Going Well5

Margins are improving
EBITDA margin is up from 7.3% to 19.6% over 3 years.
Return on capital is rising
ROCE has improved from 25.1% to 30.7%.
High return on capital employed
ROCE of 30.7% is the mark of a business that converts capital into profit efficiently.
Very low debt
Debt/Equity of 0.22x leaves the balance sheet with plenty of headroom.
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

4 items require attention · 4 high

🔴Debt has risen sharplyFinancial
Total debt is up 166% over 3 years, from ₹6 Cr to ₹16 Cr.
🔴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.
🔴Inventory building faster than salesFinancial
Inventory up 1449% against revenue up 306% — stock may not be moving.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 30.7% 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.
Margin expansion has further to run
EBITDA margin has risen from 7.3% to 19.6%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Priced below its own history
The stock trades 56% below its own median multiple. If the business performs as it has and simply re-rates back to normal, that gap is return on its own.
Cheaper than its peers
It trades 73% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.
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?

Earnings are hard to forecast
Profit has swung sharply from year to year, so any single year — good or bad — is a weak guide to the next. Cyclical earnings deserve lower multiples for that reason.
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
4 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 45% a year✓ 59.5% CAGR
Latest reported year was 108.0%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 18%✓ 19.6%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✗ -₹22 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 0.7x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 28%✓ 30.7%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

10 / 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

7 good · 3 neutral · 1 weak

Market Cap

₹135 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

8.3x

Cheap

Cheap against the generic band

P/B Ratio

1.91x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹21.3

Profitable

Profitable on a per-share basis

ROE

25.2%

Strong

Strong capital efficiency

ROCE

30.7%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

0.22x

Low

Conservative leverage

Revenue Growth (YoY)

108.0%

Healthy

Healthy top-line growth

Profit Growth (YoY)

29.7%

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

-₹28 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

ROA

15.6%

Good

Assets are working hard

Operating Margin

19.0%

Good

Healthy core-business profitability

Net Margin

13.8%

Good

Strong bottom-line conversion

Current Ratio

3.08

Comfortable

Healthy short-term liquidity

52W Range Position

31%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

181.0 / 177.2

Bullish alignment (short > long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

45.2

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹29 Cr	₹29 Cr	₹59 Cr	₹119 Cr	+59.5%
EBITDA	₹2 Cr	₹5 Cr	₹13 Cr	₹23 Cr	+121.3%
EBITDA Margin	7.3%	18.7%	22.6%	19.6%	—
PAT (Net Profit)	₹1 Cr	₹3 Cr	₹9 Cr	₹16 Cr	+137.0%
EPS	₹1.6	₹4.5	₹11.8	—	—
ROE	24.4%	28.8%	15.4%	23.1%	—
ROCE	25.1%	38.9%	21.2%	30.7%	—
Total Debt	₹6 Cr	₹4 Cr	₹11 Cr	₹16 Cr	+38.5%
Free Cash Flow	-₹2 Cr	-₹1 Cr	-₹13 Cr	-₹22 Cr	—

🟢 Revenue has grown at 59.5% a year over 3 years.

🟢 EBITDA has grown at 121.3% a year over 3 years.

🟢 EBITDA Margin has risen from 7.3% to 19.6% over 3 years (+12.2 pts).

🟢 PAT (Net Profit) has grown at 137.0% a year over 3 years.

🔴 ROE has fallen from 24.4% to 23.1% over 3 years (-1.3 pts).

🟢 ROCE has risen from 25.1% to 30.7% over 3 years (+5.6 pts).

🔴 Total Debt has grown at 38.5% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹105 Cr

Total Liabilities

₹34 Cr

Cash & Equivalents

₹1 Cr

Operating Cash Flow

-₹19 Cr

Capex

-₹3 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

96.1%

Peer Comparison

Company	P/E	ROE
LARSEN & TOUBRO LTD.	30.1x	15.2%
ADANI PORT & SEZ LTD	29.9x	14.1%
SIEMENS LTD	88.8x	10.5%

Recent News

1 mixed5 general

Desco Infratech Gets ₹2.34 Crore Adani Total Gas Order; Shares At ₹190.95

HDFC Sky, 23 Sept

Desco Infratech Limited Share Price

Upstox, 05 May

Desco Infratech Ltd Shareholding Pattern – Promoters, FIIs & DIIs

Value Research, 29 Aug

Desco Infratech wins Rs 2.34 crore order from Adani Total Gas

scanx.trade, 14 Aug

Desco Infratech hits the roof as Q4 PAT jumps 75% YoY to Rs 10 cr

Business Standard, 05 MayResults

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

Desco Infratech wins new solar and power infrastructure orders, stock moves up 4%

Alice Blue, 16 Feb

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

StrongBusiness Quality · Financial Health · Growth · Profitability · Valuation

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

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