Divgi TorqTransfer Systems Limited

Consumer Cyclical — Auto Parts · NSE

₹985.00+₹57.90 (+6.25%)

DalalBaazaar Score

55 / 100

🟡 Moderate

Verdict

CAUTION

Risk

Moderate

Driven by 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, 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, 7:47 pm

Understanding the Business

Company site ↗

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

What does this company do?

Divgi TorqTransfer Systems Limited engages in the manufacture and sale of transfer cases, automatic locking hubs, and synchronizers and components to automotive original equipment manufacturers and other customers.

IndustryAuto Parts

SectorConsumer Cyclical

Employees278

Annual revenue₹353 Cr

How does it make money?

Turns over ₹353 Cr a year. Of every ₹100 of sales, about ₹13 reaches shareholders as profit, with ₹26 left at the operating level before interest, tax and depreciation. Each of its 278 employees supports ₹1.27 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹1.27 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.

Compared side by side in Peers ↓

What is its competitive advantage?Little sign of one

Returns on capital of 9.8% 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 ROE23.0%

What is the outlook?

1 analysts covering the stock expect revenue to shrink about 4.4% and earnings to grow about 0.9% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth-4.4%

Est. earnings growth+0.9%

Analysts1

What has been driving growth?

Sales and margins have both contributed to where profit is now. Over 3 years revenue moved +32% while net margin moved -31% 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+32%

Margin effect-31%

DalalBaazaar Score

55/ 100

Moderate

Weighted across six categories. Every point is explained below.

• Revenue CAGR of 9.7% is steady
✗ Profit has declined at 2.8% a year
✗ Profit is compounding slower than revenue — margins are being squeezed as the business grows

Quality vs. Valuation

Company Quality

58/ 100

Average

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

Valuation

46/ 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

47.7x

3Y Median

53.2x

40 monthly readings · mean 61.4x · range 34.3x–123.8x

Sector Median

45.7x

median of 4 sector peers

🟢Current valuation is approximately 10% below its 3y median of 53.2x. 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 is priced broadly in line with the peer median of 45.7x.

vs. its own history

Fair

53.2x median over 40 months · -10%

vs. sector peers

Fair

45.7x median of 4 peers · +4%

vs. generic bands

Expensive

Above 35x

EV/EBITDA

32.3x

PEG

—

What's Good / What's Bad

🟢 What's Going Well3

Debt is being paid down
Total debt is down 30% over 3 years.
Very low debt
Debt/Equity of 0.28x leaves the balance sheet with plenty of headroom.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention1

Return on capital is falling
ROCE has declined from 12.4% to 9.8% — often a sign of competition or overexpansion.

Red Flags

3 items require attention · 3 watch

🟡Free cash flow is negativeFinancial
Free cash flow was -₹3 Cr in the latest year.
🟡Margins are compressingFinancial
EBITDA margin is down 4.6 points over 3 years.
🟡Inventory building faster than salesFinancial
Inventory up 84% against revenue up 32% — stock may not be moving.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Deleveraging frees up earnings
Debt is down 30% over 3 years. Every rupee of interest not paid drops to the bottom line, so profit can grow even if revenue does not.
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?

Margins are being competed away
EBITDA margin has fallen from 30.7% to 26.2%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
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

1EBITDA margin holds above 24%✓ 26.2%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Free cash flow remains positive✗ -₹3 Cr
Profit that never becomes cash eventually stops being profit.
3Revenue growth stays above 7% a year✓ 9.7% CAGR
Latest reported year was 91.3%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
4Debt / EBITDA stays below 2x✓ 0.0x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 8%✓ 9.8%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

7 / 12 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
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

4 good · 4 neutral · 3 weak

Market Cap

₹3,012 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

47.7x

Expensive

Expensive — verify against sector peers

P/B Ratio

4.74x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹20.67

Profitable

Profitable on a per-share basis

ROE

7.4%

Weak

Weak capital efficiency

ROCE

9.8%

Moderate

Moderate return on the capital in the business

Debt/Equity

0.28x

Low

Conservative leverage

Revenue Growth (YoY)

91.3%

Healthy

Healthy top-line growth

Profit Growth (YoY)

182.5%

Healthy

Profits growing at a healthy clip

Dividend Yield

0.33%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

-₹3 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

P/E (Forward)

29.7x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

Operating Margin

21.3%

Good

Healthy core-business profitability

Net Margin

15.1%

Good

Strong bottom-line conversion

Current Ratio

5.04

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.45

Defensive

Steadier than the market

52W Range Position

54%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

1092.9 / 1148.4

Bearish alignment (short < long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

29.9

Oversold zone

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹267 Cr	₹250 Cr	₹219 Cr	₹353 Cr	+9.7%
EBITDA	₹82 Cr	₹73 Cr	₹59 Cr	₹92 Cr	+4.0%
EBITDA Margin	30.7%	29.0%	26.8%	26.2%	—
PAT (Net Profit)	₹51 Cr	₹40 Cr	₹24 Cr	₹47 Cr	-2.8%
EPS	₹18.45	₹12.99	₹7.98	₹15.34	-6.0%
ROE	9.3%	6.8%	4.1%	7.4%	—
ROCE	12.4%	9.2%	5.5%	9.8%	—
Total Debt	₹3 Cr	₹2 Cr	₹1 Cr	₹2 Cr	-11.3%
Free Cash Flow	-₹28 Cr	-₹45 Cr	₹9 Cr	-₹3 Cr	—

🟢 Revenue has grown at 9.7% a year over 3 years.

🟢 EBITDA has grown at 4.0% a year over 3 years.

🔴 EBITDA Margin has fallen from 30.7% to 26.2% over 3 years (-4.6 pts).

🔴 PAT (Net Profit) has shrunk at 2.8% a year over 3 years.

🔴 EPS has shrunk at 6.0% a year over 3 years.

🔴 ROE has fallen from 9.3% to 7.4% over 3 years (-1.9 pts).

🔴 ROCE has fallen from 12.4% to 9.8% over 3 years (-2.6 pts).

🟢 Total Debt has shrunk at 11.3% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹731 Cr

Total Liabilities

₹96 Cr

Cash & Equivalents

₹32 Cr

Operating Cash Flow

₹41 Cr

Capex

-₹44 Cr

Shareholding (proxy)

Institutional Holding

26.2%

Insider Holding

63.3%

Corporate Actions

Dividend Rate

₹3.27

Ex-Dividend Date

10 Sept 2026

Analyst Consensus

Recommendations

0 Buy · 1 Hold · 0 Sell

Target Price (Mean)

₹1,128

+14.5% vs CMP

Target Range

₹1,128 – ₹1,128

Peer Comparison

Company	P/E	ROE
BOSCH LIMITED	56.9x	15.9%
MARUTI SUZUKI INDIA LTD.	25.2x	13.4%
TVS MOTOR COMPANY LTD	56.8x	35.8%
EICHER MOTORS LTD	34.7x	23.0%

Recent News

2 positive2 mixed2 general

DIVGIITTS Forecast — Price Target — Prediction for 2027

TradingView, 25 JunAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Divgi TorqTransfer Systems Limited (NSE:DIVGIITTS) Stock Is Going Strong But Fundamentals Look Uncertain: What Lies Ahead ?

Simply Wall Street, 14 Feb

Is Divgi Torqtransfer Systems a Good Buy After Its Q1 FY27 Results?

Univest, 10 SeptResults

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

Divgi Torqtransfer Systems surges as Q1 profit jumps 183%

Business Standard, 12 AugResults

🟢Potentially positiveReported improvement. Check whether it came from volume, price or a one-off item before treating it as a trend.

Volume Gainers, June 30, 2026: Divgi TorqTransfer, Signpost Lead

HDFC Sky, 30 Jun

Divgi TorqTransfer Q1 Profit Jumps 183% as Revenue Surges 91% YoY

scanx.trade, 11 AugResults

🟢Potentially positiveReported improvement. Check whether it came from volume, price or a one-off item before treating it as a trend.

Watch Items

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

MiddlingProfitability · Valuation

WeakGrowth · Risk

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.

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