Digilogic Systems Limited

Industrials — Aerospace & Defense · BSE

₹192.00−₹1.50 (−0.78%)

DalalBaazaar Score

56 / 100

🟡 Moderate

Verdict

CAUTION

Risk

High

Driven by high debt relative to equity, micro-cap size, which brings thin liquidity.

In simple words: Reasonable but unspectacular business quality, with modest growth. Debt is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:07 pm

Caution warranted. Multiple fundamental metrics — flagged in red below — point to either valuation stretch, leverage risk, or weakening profitability. This doesn't mean avoid the stock outright, but it does mean the burden of proof is on the growth story to justify the current price.

Understanding the Business

Company site ↗

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

What does this company do?

Digilogic Systems Limited designs, develops, integrates, manufactures, supplies, and supports automated test equipment systems, radar and electronic warfare environmental simulators, application software, and embedded signal processing solutions for defence and aerospace engineering sector.

IndustryAerospace & Defense

SectorIndustrials

Employees104

Annual revenue₹77 Cr

How does it make money?

Turns over ₹77 Cr a year. Of every ₹100 of sales, about ₹13 reaches shareholders as profit, with ₹21 left at the operating level before interest, tax and depreciation. Each of its 104 employees supports ₹74.5 lakh of revenue a year, the signature of a people-led business.

EBITDA margin21.0%

Net margin13.5%

Revenue / employee₹74.5 lakh

Who are its competitors?

The closest listed comparisons in its industry are LARSEN & TOUBRO LTD., SIEMENS LTD, ABB INDIA LIMITED. These are the companies its valuation and returns are measured against elsewhere in this report.

LARSEN & TOUBRO LTD.P/E 30.1x · ROE 15.2%

SIEMENS LTDP/E 88.8x · ROE 10.5%

ABB INDIA LIMITEDP/E 92.6x · ROE 19.1%

What is its competitive advantage?Little sign of one

Returns on capital of 13.3% 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.

ROCE13.3%

ROE14.8%

Peer median ROE15.2%

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved +39% while net margin moved +245% 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+39%

Margin effect+245%

DalalBaazaar Score

56/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ P/E of 43.1x is demanding — it needs sustained high growth to justify
✗ P/B of 5.14x is a steep premium to book

Quality vs. Valuation

Company Quality

68/ 100

Good

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

Valuation

56/ 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

43.1x

Sector Median

88.8x

median of 3 sector peers

🟢Against its sector it trades 51% below the peer median of 88.8x.

vs. its own history

Not enough price and earnings history

vs. sector peers

Cheap

88.8x median of 3 peers · -51%

vs. generic bands

Expensive

Above 35x

P/E (Trailing)

43.1x

P/B

5.14x

EV/EBITDA

32.4x

PEG

0.63

Dividend Yield

None

What's Good / What's Bad

🟢 What's Going Well4

Margins are improving
EBITDA margin is up from 10.0% to 21.0% over 3 years.
Debt is being paid down
Total debt is down 63% over 3 years.
Cash flow has turned positive
Free cash flow moved from negative to positive over 3 years.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention3

Return on equity is falling
ROE has dropped from 19.6% to 9.6% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 27.6% to 13.3% — often a sign of competition or overexpansion.
Receivables growing faster than sales
Receivables are up 180% against revenue growth of 39% — customers are taking longer to pay.

Red Flags

2 items require attention · 2 high

🔴High leverageFinancial
Debt/Equity of 3.76x — earnings must service borrowings before shareholders see anything.
🔴Receivables growing faster than salesFinancial
Receivables up 180% against revenue up 39% — sales are being booked faster than they are collected.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Margin expansion has further to run
EBITDA margin has risen from 10.0% to 21.0%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Deleveraging frees up earnings
Debt is down 63% over 3 years. Every rupee of interest not paid drops to the bottom line, so profit can grow even if revenue does not.
Cheaper than its peers
It trades 51% 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?

Leverage amplifies any setback
Debt/Equity of 3.76x. Interest is payable whether or not the business has a good year.
Sales are being booked faster than collected
Receivables are up 180% against revenue up 39%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
Returns on shareholder capital are falling
ROE has dropped from 19.6% to 9.6%. 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.
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.

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

1Revenue growth stays above 9% a year✓ 11.6% CAGR
Latest reported year was 7.5%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 19%✓ 21.0%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✓ ₹7 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 0.2x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 10%✓ 13.3%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

7 / 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

3 good · 5 neutral · 3 weak

Market Cap

₹556 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

43.1x

Expensive

Expensive — verify against sector peers

P/B Ratio

5.14x

Rich

Steep premium to book — needs high, durable returns to justify

EPS (TTM)

₹4.45

Profitable

Profitable on a per-share basis

ROE

14.8%

Moderate

Moderate capital efficiency

ROCE

13.3%

Moderate

Moderate return on the capital in the business

Debt/Equity

3.76x

High

High leverage

Revenue Growth (YoY)

7.5%

Modest

Modest growth

Profit Growth (YoY)

33.8%

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

₹4 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

CMP

₹192

ROA

8.4%

Good

Assets are working hard

Operating Margin

18.2%

Good

Healthy core-business profitability

Net Margin

13.5%

Good

Strong bottom-line conversion

Current Ratio

3.46

Comfortable

Healthy short-term liquidity

52W Range Position

84%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

189.0 / 186.0

Bullish alignment (short > long)

RSI (14)

65.4

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹56 Cr	₹52 Cr	₹72 Cr	₹77 Cr	+11.6%
EBITDA	₹6 Cr	₹6 Cr	₹13 Cr	₹16 Cr	+42.9%
EBITDA Margin	10.0%	11.0%	18.5%	21.0%	—
PAT (Net Profit)	₹2 Cr	₹2 Cr	₹8 Cr	₹10 Cr	+68.6%
EPS	₹0.75	₹0.83	₹2.69	—	—
ROE	19.6%	17.8%	23.5%	9.6%	—
ROCE	27.6%	27.3%	32.4%	13.3%	—
Total Debt	₹11 Cr	₹8 Cr	₹13 Cr	₹4 Cr	-28.1%
Free Cash Flow	-₹7 Cr	₹5 Cr	-₹13 Cr	₹7 Cr	—

🟢 Revenue has grown at 11.6% a year over 3 years.

🟢 EBITDA has grown at 42.9% a year over 3 years.

🟢 EBITDA Margin has risen from 10.0% to 21.0% over 3 years (+11.0 pts).

🟢 PAT (Net Profit) has grown at 68.6% a year over 3 years.

🔴 ROE has fallen from 19.6% to 9.6% over 3 years (-10.0 pts).

🔴 ROCE has fallen from 27.6% to 13.3% over 3 years (-14.3 pts).

🟢 Total Debt has shrunk at 28.1% a year over 3 years.

🟢 Free Cash Flow has turned positive, from -₹7 Cr to ₹7 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹137 Cr

Total Liabilities

₹29 Cr

Total Debt

₹4 Cr

Cash & Equivalents

₹32 Cr

Operating Cash Flow

₹13 Cr

Capex

-₹6 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

79.5%

Peer Comparison

Company	P/E	ROE
LARSEN & TOUBRO LTD.	30.1x	15.2%
SIEMENS LTD	88.8x	10.5%
ABB INDIA LIMITED	92.6x	19.1%

Recent News

1 mixed5 general

SME aerospace & defense stock Digilogic Systems zooms 56% in 3 days

Business Standard, 05 Aug

Digilogic Systems Ltd. Upper Circuit Today: Price, Data and Peers

Univest, 30 Sept

DIGILOGIC SYSTEMS LIMITED Share Price

Upstox, 05 May

DIGILOGIC Stock Price and Chart — BSE:DIGILOGIC

TradingView, 28 Jan

Digilogic Systems wins Best Manufacturing Company Award 2026

scanx.trade, 07 Oct

Digilogic Systems Share Price Falls 5% Lower Circuit On BSE SME Debut

Samco, 28 JanPrice move

🟡Mixed / dependsA price move rather than a change in the business. If the figures on this page have not moved, the fall is either an opportunity or news they have yet to catch up with.

Watch Items

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

DalalBaazaar Thesis

🟡Business QualityAdequate11.8/20

🟢Financial HealthStrong14.5/20

🟢GrowthStrong16.1/20

🟡ProfitabilityModerate8.2/15

🔴ValuationDemanding3.2/15

🔴RiskHigh2.4/10

Good business at a fair price

A sound business at a reasonable valuation. Suitable for a long-term holding, with the valuation and the direction of margins worth watching rather than the business itself. 2 high-severity red flags sit above this conclusion and should be read first.

This thesis breaks if

✓Revenue growth stays above 9% a year11.6% CAGR
✓EBITDA margin holds above 19%21.0%
✓Free cash flow remains positive₹7 Cr
✓Debt / EBITDA stays below 2x0.2x
✓ROCE stays above 10%13.3%