DRC Systems India Limited

Technology — Information Technology Services · NSE

₹11.73−₹0.14 (−1.18%)

DalalBaazaar Score

72 / 100

🟢 Good

Verdict

REASONABLE

Risk

Moderate

Driven by short-term liabilities exceed short-term assets, micro-cap size, which brings thin liquidity.

In simple words: Strong business and financial position, with both sales and profits growing well. Short-term liquidity is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:08 pm

Constructive picture on fundamentals. Profitability, leverage and growth metrics are broadly healthy on this snapshot. That said, valuation should still be checked against direct sector peers (not just the generic P/E bands used here) before treating this as a buy signal.

Understanding the Business

Company site ↗

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

What does this company do?

DRC Systems India Limited, a software development company, engages in the provision of information technology (IT) and IT enabled services in India, the United Arab Emirates, and internationally.

IndustryInformation Technology Services

SectorTechnology

Employees197

Annual revenue₹96 Cr

How does it make money?

Turns over ₹96 Cr a year. Of every ₹100 of sales, about ₹20 reaches shareholders as profit, with ₹31 left at the operating level before interest, tax and depreciation. Each of its 197 employees supports ₹48.5 lakh of revenue a year, the signature of a people-led business.

EBITDA margin30.7%

Net margin20.2%

Revenue / employee₹48.5 lakh

Who are its competitors?

The closest listed comparisons in its industry are TATA CONSULTANCY SERV LT, INFOSYS LIMITED, HCL TECHNOLOGIES LTD, WIPRO LTD. These are the companies its valuation and returns are measured against elsewhere in this report.

TATA CONSULTANCY SERV LTP/E 17.3x · ROE 45.6%

INFOSYS LIMITEDP/E 15.8x · ROE 32.0%

HCL TECHNOLOGIES LTDP/E 20.4x · ROE 24.6%

WIPRO LTDP/E 14.5x · ROE 15.9%

What is its competitive advantage?Some evidence

ROCE of 18.8% is above what capital typically costs, which suggests some pricing power, though not yet the sustained, wide gap that marks a durable advantage.

ROCE18.8%

ROE17.1%

Peer median ROE32.0%

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 +273% while net margin moved -23% 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+273%

Margin effect-23%

DalalBaazaar Score

72/ 100

Good

Weighted across six categories. Every point is explained below.

✓ Beta of 0.60 — historically steadier than the index
✗ Micro Cap: thinner liquidity and sharper drawdowns are normal

Quality vs. Valuation

Company Quality

74/ 100

Good

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

7.7x

3Y Median

24.6x

40 monthly readings · mean 24.1x · range 8.3x–53.0x

Sector Median

16.5x

median of 4 sector peers

🟢Current valuation is approximately 69% below its 3y median of 24.6x. 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 53% below the peer median of 16.5x.

vs. its own history

Cheap

24.6x median over 40 months · -69%

vs. sector peers

Cheap

16.5x median of 4 peers · -53%

vs. generic bands

Cheap

Below 15x

P/E (Trailing)

7.7x

P/B

1.50x

EV/EBITDA

5.7x

PEG

0.18

Dividend Yield

None

What's Good / What's Bad

🟢 What's Going Well5

Margins are improving
EBITDA margin is up from 23.6% to 30.7% over 3 years.
Debt is being paid down
Total debt is down 31% over 3 years.
Cash flow has turned positive
Free cash flow moved from negative to positive over 3 years.
Valuation below its historical average
At 7.7x the stock trades 69% below its own median of 24.6x.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention2

Return on capital is falling
ROCE has declined from 24.5% to 18.8% — often a sign of competition or overexpansion.
Short-term liquidity is tight
Current ratio of 0.49 — near-term obligations exceed near-term assets.

Red Flags

1 item require attention · 1 watch

🟡Short-term liquidity is tightFinancial
Current ratio of 0.49 — near-term obligations exceed near-term assets.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 18.8% 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 23.6% to 30.7%. 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 31% over 3 years. Every rupee of interest not paid drops to the bottom line, so profit can grow even if revenue does not.
Priced below its own history
The stock trades 69% 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 53% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.

🔴 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 41% a year✓ 55.0% CAGR
Latest reported year was 27.8%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 29%✓ 30.7%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✓ ₹47 Cr
Profit that never becomes cash eventually stops being profit.
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 16%✓ 18.8%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

9 / 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

8 good · 3 neutral · 0 weak

Market Cap

₹169 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

7.7x

Cheap

Cheap against the generic band

P/B Ratio

1.50x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹1.52

Profitable

Profitable on a per-share basis

ROE

17.1%

Strong

Strong capital efficiency

ROCE

18.8%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

0.37x

Low

Conservative leverage

Revenue Growth (YoY)

27.8%

Healthy

Healthy top-line growth

Profit Growth (YoY)

15.2%

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

₹47 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

CMP

₹11.73

Operating Margin

20.2%

Good

Healthy core-business profitability

Net Margin

20.3%

Good

Strong bottom-line conversion

Current Ratio

0.49

Tight

Tight short-term liquidity

Beta (vs Nifty)

0.60

Defensive

Steadier than the market

52W Range Position

10%

Near low

Near its 52-week low

Technical Snapshot

SMA 20 / SMA 50

12.5 / 12.8

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

33.9

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹26 Cr	₹48 Cr	₹65 Cr	₹96 Cr	+55.0%
EBITDA	₹6 Cr	₹15 Cr	₹23 Cr	₹29 Cr	+69.2%
EBITDA Margin	23.6%	31.4%	35.6%	30.7%	—
PAT (Net Profit)	₹7 Cr	₹12 Cr	₹15 Cr	₹19 Cr	+42.2%
EPS	₹0.54	₹0.87	₹1.13	₹1.4	+37.4%
ROE	19.5%	24.4%	23.3%	17.1%	—
ROCE	24.5%	25.0%	25.6%	18.8%	—
Total Debt	₹1 Cr	₹1 Cr	₹1 Cr	₹0 Cr	-11.7%
Free Cash Flow	-₹1 Cr	₹3 Cr	₹10 Cr	₹47 Cr	—

🟢 Revenue has grown at 55.0% a year over 3 years.

🟢 EBITDA has grown at 69.2% a year over 3 years.

🟢 EBITDA Margin has risen from 23.6% to 30.7% over 3 years (+7.1 pts).

🟢 PAT (Net Profit) has grown at 42.2% a year over 3 years.

🟢 EPS has grown at 37.4% a year over 3 years.

🔴 ROE has fallen from 19.5% to 17.1% over 3 years (-2.4 pts).

🔴 ROCE has fallen from 24.5% to 18.8% over 3 years (-5.7 pts).

🟢 Total Debt has shrunk at 11.7% a year over 3 years.

🟢 Free Cash Flow has turned positive, from -₹1 Cr to ₹47 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹154 Cr

Total Liabilities

₹41 Cr

Total Debt

₹0 Cr

Cash & Equivalents

₹3 Cr

Operating Cash Flow

₹48 Cr

Capex

-₹0 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

73.9%

Peer Comparison

Company	P/E	ROE
TATA CONSULTANCY SERV LT	17.3x	45.6%
INFOSYS LIMITED	15.8x	32.0%
HCL TECHNOLOGIES LTD	20.4x	24.6%
WIPRO LTD	14.5x	15.9%

Recent News

2 mixed4 general

DRC Systems India Share Price: price action and metrics

Univest, 13 Oct

DRC Systems India Ltd is Rated Hold by MarketsMOJO

MarketsMojo, 17 Oct

DRC Systems India to Acquire Skizzle Stake and Exit Inexture Solutions

Whalesbook, 14 OctM&A

🟡Mixed / dependsAcquisitions change the balance sheet before they change the earnings. Look at what was paid, how it was funded, and whether debt rose.

DRC Systems approves ₹2 crore Skizzle stake acquisition, Inexture divestment

scanx.trade, 14 OctM&A

🟡Mixed / dependsAcquisitions change the balance sheet before they change the earnings. Look at what was paid, how it was funded, and whether debt rose.

Sentiment Still Eluding DRC Systems India Limited (NSE:DRCSYSTEMS)

Simply Wall Street, 26 Jan

DRC Systems India: Best Stock in Its Sector? Key Metrics

Univest, 25 Sept

Watch Items

Trading very close to its 52-week low — worth checking whether this reflects a temporary setback or a structural problem.
Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

🟢Business QualityStrong14.3/20

🟢Financial HealthStrong15.1/20

🟡GrowthModest12.9/20

🟢ProfitabilityStrong12.8/15

🟢ValuationAttractive11.8/15

🟡RiskModerate5.2/10

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.

This thesis breaks if

✓Revenue growth stays above 41% a year55.0% CAGR
✓EBITDA margin holds above 29%30.7%
✓Free cash flow remains positive₹47 Cr
✓Debt / EBITDA stays below 2x0.0x
✓ROCE stays above 16%18.8%