Driven by negative free cash flow, a very high earnings multiple, which leaves little margin for disappointment.
In simple words: Strong business and financial position, with both sales and profits growing well. Cash generation is currently the main factor to watch.
The 60-second version of Dhoot Transmission Limited — what it does, how it earns, and who it competes with, before any of the numbers below.
What does this company do?
Dhoot Transmission Limited operates as a manufacturer of wiring harnesses, automotive switches, electronic sensors and controllers, connectors, terminals, automotive cables, power cords, and related components.
IndustryAuto Parts
SectorConsumer Cyclical
Employees2,735
Annual revenue₹4,507 Cr
How does it make money?
Turns over ₹4,507 Cr a year. Of every ₹100 of sales, about ₹9 reaches shareholders as profit, with ₹16 left at the operating level before interest, tax and depreciation. Each of its 2,735 employees supports ₹1.65 Cr of revenue a year, the signature of a capital- or asset-led business.
Revenue / employee₹1.65 Cr
Who are its competitors?
The closest listed comparisons in its industry are BOSCH LIMITED, MARUTI SUZUKI INDIA LTD., TVS MOTOR COMPANY LTD, EICHER MOTORS LTD. These are the companies its valuation and returns are measured against elsewhere in this report.
What is its competitive advantage?The numbers suggest a real one
ROCE has stayed above 15% in every year available and stands at 21.4%. Returns that high normally get competed away; when they persist, something is protecting them, and its ROE of 16.3% against a peer median of 23.0% is consistent with that. What that something is — brand, scale, switching costs, regulation — the accounts cannot tell you.
Peer median ROE23.0%
What is the outlook?
5 analysts covering the stock expect revenue to grow about 19.9% and earnings to grow about 32.9% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.
Est. revenue growth+19.9%
Est. earnings growth+32.9%
Analysts5
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 +113% while net margin moved +14% 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+113%
Margin effect+14%
DalalBaazaar Score
60/ 100
Good
Weighted across six categories. Every point is explained below.
✗ P/E of 73.2x is demanding — it needs sustained high growth to justify
✗ P/B of 12.00x is a steep premium to book
Quality vs. Valuation
Company Quality
70/ 100
Good
How good the business is, ignoring the share price entirely.
vs
Valuation
28/ 100
Expensive
What you are being asked to pay, ignoring how good the business is.
A good business, but the price already reflects that. The quality is real; the question is whether you are overpaying for it today.
Historical Valuation
Current P/E
73.2x
Sector Median
45.7x
median of 4 sector peers
⚠️Against its sector it trades 60% above the peer median of 45.7x.
vs. its own history
Not enough price and earnings history
vs. sector peers
Expensive
45.7x median of 4 peers · +60%
vs. generic bands
Expensive
Above 35x
EV/EBITDA
42.9x
PEG
2.13
What's Good / What's Bad
🟢 What's Going Well3
Margins are improving
EBITDA margin is up from 14.1% to 16.3% over 3 years.
High return on capital employed
ROCE of 21.4% 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 Attention2
Return on equity is falling
ROE has dropped from 34.6% to 16.3% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 34.8% to 21.4% — often a sign of competition or overexpansion.
Red Flags
4 items require attention · 3 high · 1 watch
🔴Debt has risen sharplyFinancial
Total debt is up 106% over 3 years, from ₹446 Cr to ₹918 Cr.
🔴Free cash flow negative for 3 yearsFinancial
The business has not covered its capital spending from operations for several years running, which has to be funded externally.
🔴Receivables growing faster than salesFinancial
Receivables up 198% against revenue up 113% — sales are being booked faster than they are collected.
🟡Inventory building faster than salesFinancial
Inventory up 142% against revenue up 113% — stock may not be moving.
Investment Thesis
🟢 Bull CaseWhat could make this work?
Capital compounds at a high rate
ROCE of 21.4% 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 14.1% to 16.3%. 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?
Sales are being booked faster than collected
Receivables are up 198% against revenue up 113%. 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 60% above the peer median. That premium needs a reason that persists, or it closes.
Returns on shareholder capital are falling
ROE has dropped from 34.6% to 16.3%. 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.
Several serious flags at once
3 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 21% a year✓ 28.6% CAGR
Latest reported year was 49.7%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 14%✓ 16.3%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✗ -₹14 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 1.2x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 18%✓ 21.4%
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
✓ Analyst consensus isn't majority-sell
Price history
Quick Metrics
6 good · 2 neutral · 3 weak
Market Cap
₹31,705 Cr
Mid Cap
Mid-sized — more growth headroom, but sharper swings than large caps
P/E (Trailing)
73.2x
Expensive
Expensive — verify against sector peers
P/B Ratio
12.00x
Rich
Steep premium to book — needs high, durable returns to justify
EPS (TTM)
₹21.17
Profitable
Profitable on a per-share basis
ROE
16.3%
Strong
Strong capital efficiency
ROCE
21.4%
Strong
Earns comfortably above its likely cost of capital
Debt/Equity
0.38x
Low
Conservative leverage
Revenue Growth (YoY)
49.7%
Healthy
Healthy top-line growth
Profit Growth (YoY)
17.9%
Healthy
Profits growing at a healthy clip
Dividend Yield
None
None
No dividend yield reported — usually means no payout, but verify if one was recently initiated
Free Cash Flow
-₹14 Cr
Cash burning
Spending more cash than the operations bring in
More Metrics
P/E (Forward)
41.3x
Improving
Below the trailing multiple — the street expects earnings to grow into the price
Operating Margin
12.4%
Average
Average margins
Net Margin
8.7%
Average
Average bottom-line conversion
Current Ratio
1.94
Comfortable
Healthy short-term liquidity
52W Range Position
69%
Mid-range
Mid-range
Technical Snapshot
RSI (14)
49.0
Neutral momentum
Financial Trend (4-Year)
Metric
FY23
FY24
FY25
FY26
3Y CAGR
Revenue
₹2,117 Cr
₹2,791 Cr
₹3,433 Cr
₹4,507 Cr
+28.6%
EBITDA
₹298 Cr
₹509 Cr
₹597 Cr
₹735 Cr
+35.1%
EBITDA Margin
14.1%
18.2%
17.4%
16.3%
—
PAT (Net Profit)
₹164 Cr
₹299 Cr
₹354 Cr
₹397 Cr
+34.4%
EPS
₹8
₹14.6
₹17.3
₹19.39
+34.4%
ROE
34.6%
39.9%
35.6%
16.3%
—
ROCE
34.8%
43.5%
39.6%
21.4%
—
Total Debt
₹446 Cr
₹576 Cr
₹815 Cr
₹918 Cr
+27.2%
Free Cash Flow
₹86 Cr
-₹61 Cr
-₹101 Cr
-₹14 Cr
—
🟢 Revenue has grown at 28.6% a year over 3 years.
🟢 EBITDA has grown at 35.1% a year over 3 years.
🟢 EBITDA Margin has risen from 14.1% to 16.3% over 3 years (+2.2 pts).
🟢 PAT (Net Profit) has grown at 34.4% a year over 3 years.
🟢 EPS has grown at 34.4% a year over 3 years.
🔴 ROE has fallen from 34.6% to 16.3% over 3 years (-18.3 pts).
🔴 ROCE has fallen from 34.8% to 21.4% over 3 years (-13.4 pts).
🔴 Total Debt has grown at 27.2% a year over 3 years.
🔴 Free Cash Flow has turned negative, from ₹86 Cr to -₹14 Cr.
The quality is real and the price already reflects it. Buying here is a bet that the business keeps compounding for long enough to grow into the multiple — which good businesses often do, but it removes the margin for error that a lower price would have given you. 3 high-severity red flags sit above this conclusion and should be read first.
