Earkart Limited

Healthcare — Medical Devices · BSE

₹125.35₹0.00 (0.00%)

DalalBaazaar Score

62 / 100

🟢 Good

Verdict

REASONABLE

Risk

Moderate

Driven by negative free cash flow, micro-cap size, which brings thin liquidity, falling profits.

In simple words: Reasonable but unspectacular business quality, though profits are falling even as sales grow. 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 Earkart Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Earkart Limited manufactures and distributes modern hearing aids and related accessories in India and internationally.

IndustryMedical Devices

SectorHealthcare

Employees58

Annual revenue₹54 Cr

How does it make money?

Turns over ₹54 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 58 employees supports ₹93.2 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹93.2 lakh

Who are its competitors?

The closest listed comparisons in its industry are SUN PHARMACEUTICAL IND L, CIPLA LTD, DR. REDDY S LABORATORIES, APOLLO HOSPITALS ENTER. L. 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 12.1% 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 ROE14.5%

What has been driving growth?

Sales and margins have both contributed to where profit is now. Over 3 years revenue moved +87% while net margin moved +101% 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+87%

Margin effect+101%

DalalBaazaar Score

62/ 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

68/ 100

Good

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

Valuation

60/ 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

31.4x

1.2Y Median

29.7x

14 monthly readings · mean 29.8x · range 24.0x–47.3x

Sector Median

33.3x

median of 4 sector peers

🟡Currently trading close to its 1.2y median of 29.7x — the market is paying about what it usually pays for this company.

🟡Against its sector it is priced broadly in line with the peer median of 33.3x.

vs. its own history

Fair

29.7x median over 14 months · +6%

vs. sector peers

Fair

33.3x median of 4 peers · -6%

vs. generic bands

Fair

15x–35x

EV/EBITDA

17.6x

PEG

0.57

What's Good / What's Bad

🟢 What's Going Well4

Margins are improving
EBITDA margin is up from 5.6% to 15.9% over 3 years.
Debt is being paid down
Total debt is down 100% over 3 years.
Very low debt
Debt/Equity of 0.00x leaves the balance sheet with plenty of headroom.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention2

Return on equity is falling
ROE has dropped from 20.0% to 7.7% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 22.1% to 12.1% — often a sign of competition or overexpansion.

Red Flags

2 items require attention · 1 high · 1 watch

🔴Receivables growing faster than salesFinancial
Receivables up 348% against revenue up 87% — sales are being booked faster than they are collected.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹18 Cr in the latest year.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Margin expansion has further to run
EBITDA margin has risen from 5.6% to 15.9%. 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 100% 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?

Sales are being booked faster than collected
Receivables are up 348% against revenue up 87%. 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 20.0% to 7.7%. 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 17% a year✓ 23.2% CAGR
Latest reported year was 60.8%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 14%✓ 15.9%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✗ -₹18 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 9%✓ 12.1%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

6 / 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 · 6 neutral · 2 weak

Market Cap

₹172 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

31.4x

Fair

Fairly valued against the generic band

P/B Ratio

2.68x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹3.99

Profitable

Profitable on a per-share basis

ROE

11.7%

Moderate

Moderate capital efficiency

ROCE

12.1%

Moderate

Moderate return on the capital in the business

Debt/Equity

0.00x

Low

Conservative leverage

Revenue Growth (YoY)

60.8%

Healthy

Healthy top-line growth

Profit Growth (YoY)

-9.2%

Falling

Profits are shrinking

Dividend Yield

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

ROA

9.8%

Good

Assets are working hard

Operating Margin

15.3%

Good

Healthy core-business profitability

Net Margin

9.1%

Average

Average bottom-line conversion

Current Ratio

12.67

Comfortable

Healthy short-term liquidity

52W Range Position

13%

Near low

Near its 52-week low

Technical Snapshot

SMA 20 / SMA 50

130.2 / 129.6

Bullish alignment (short > long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

0.0

Oversold zone

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹29 Cr	₹32 Cr	₹43 Cr	₹54 Cr	+23.2%
EBITDA	₹2 Cr	₹4 Cr	₹10 Cr	₹9 Cr	+74.2%
EBITDA Margin	5.6%	11.4%	22.9%	15.9%	—
PAT (Net Profit)	₹1 Cr	₹3 Cr	₹7 Cr	₹5 Cr	+55.5%
EPS	₹0.95	₹2.22	₹5	—	—
ROE	20.0%	23.5%	34.6%	7.7%	—
ROCE	22.1%	26.0%	46.9%	12.1%	—
Total Debt	₹1 Cr	₹4 Cr	₹5 Cr	₹0 Cr	-87.4%
Free Cash Flow	-₹0 Cr	-₹2 Cr	₹0 Cr	-₹18 Cr	—

🟢 Revenue has grown at 23.2% a year over 3 years.

🟢 EBITDA has grown at 74.2% a year over 3 years.

🟢 EBITDA Margin has risen from 5.6% to 15.9% over 3 years (+10.3 pts).

🟢 PAT (Net Profit) has grown at 55.5% a year over 3 years.

🔴 ROE has fallen from 20.0% to 7.7% over 3 years (-12.3 pts).

🔴 ROCE has fallen from 22.1% to 12.1% over 3 years (-10.0 pts).

🟢 Total Debt has shrunk at 87.4% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹69 Cr

Total Liabilities

₹5 Cr

Cash & Equivalents

₹22 Cr

Operating Cash Flow

-₹13 Cr

Capex

-₹5 Cr

Shareholding (proxy)

Institutional Holding

3.0%

Insider Holding

86.9%

Peer Comparison

Company	P/E	ROE
SUN PHARMACEUTICAL IND L	34.9x	14.5%
CIPLA LTD	31.8x	9.8%
DR. REDDY S LABORATORIES	31.0x	8.8%
APOLLO HOSPITALS ENTER. L	54.3x	22.0%

Recent News

1 positive2 mixed3 general

EARKART LIMITED Share Price - Live EARKART Stock Price & Chart

Upstox, 05 May

Earkart Ltd. Share Price rises 10.19% on strong metrics

Univest, 15 SeptPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

Earkart FY26 revenue rises 25.4% to ₹540.35 crore, net profit falls 28.4%

scanx.trade, 26 MayResults

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

Earkart Ltd. Share Price rise: fundamentals and sector view

Univest, 18 SeptPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

Earkart Limited incorporates UK subsidiary Earkart Health Limited

scanx.trade, 22 Jun

Earkart IPO Allotment Status Online: Check Steps To Verify Status

Groww, 03 Oct

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

StrongFinancial Health · Growth

MiddlingBusiness Quality · Profitability · Valuation

WeakRisk

Points for each in the Score ↑

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. 1 high-severity red flag sits above this conclusion and should be read first.

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