Emkay Taps and Cutting Tools Limited

Sector n/a · NSE

₹883.95₹0.00 (0.00%)

DalalBaazaar Score

42 / 100

🟡 Moderate

Verdict

CAUTION

Risk

High

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

In simple words: The business is earning a fairly low return on the money invested in it, but sales are shrinking. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:02 pm

Understanding the Business

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

How does it make money?

Turns over ₹33 Cr a year. Of every ₹100 of sales, about ₹25 reaches shareholders as profit, with ₹2 left at the operating level before interest, tax and depreciation.

What is its competitive advantage?Little sign of one

Returns on capital of 3.4% 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.

What has been driving growth?

Sales and margins have both contributed to where profit is now. Over 3 years revenue moved -63% while net margin moved -50% 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-63%

Margin effect-50%

DalalBaazaar Score

42/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Revenue has contracted at 28.2% a year
✗ Profit has declined at 43.1% a year
✗ Profit fell 69.7% in the latest year

Quality vs. Valuation

Company Quality

43/ 100

Weak

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

Valuation

18/ 100

Expensive

What you are being asked to pay, ignoring how good the business is.

Weak on business quality and not cheap enough to compensate.

vs. its own history

Not enough price and earnings history

vs. sector peers

Not enough peers with a usable P/E

vs. generic bands

No P/E available

EV/EBITDA

1737.6x

PEG

—

What's Good / What's Bad

🟢 What's Going Well1

Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention2

Return on equity is falling
ROE has dropped from 19.5% to 2.7% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 25.0% to 3.4% — often a sign of competition or overexpansion.

Red Flags

3 items require attention · 1 high · 2 watch

🔴Significant margin compressionFinancial
EBITDA margin has fallen 50.3 points, from 52.0% to 1.7%.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹5 Cr in the latest year.
🟡Profit is decliningFinancial
Net profit is down 82% over 3 years.

Investment Thesis

🟢 Bull CaseWhat could make this work?

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 52.0% to 1.7%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
Returns on shareholder capital are falling
ROE has dropped from 19.5% to 2.7%. 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

1EBITDA margin holds above 0%✓ 1.7%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Free cash flow remains positive✗ -₹5 Cr
Profit that never becomes cash eventually stops being profit.
3ROCE stays above 8%✗ 3.4%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

3 / 8 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✗ Strong return on capital employed (ROCE ≥ 15%)
✓ Healthy net margin (≥ 10%)
✗ Generates positive free cash flow
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✗ Revenue growing year-over-year
✗ Profit growing year-over-year
✓ Short-term technical trend isn't bearish

Price history

Quick Metrics

0 good · 6 neutral · 5 weak

Market Cap

₹943 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

Not available

No data

Source didn't return this field

P/B Ratio

Not available

No data

Source didn't return this field

EPS (TTM)

Not available

No data

Source didn't return this field

ROE

2.7%

Weak

Weak capital efficiency

ROCE

3.4%

Weak

Low return on total capital employed

Debt/Equity

Not available

No data

Source didn't return this field

Revenue Growth (YoY)

-21.7%

Shrinking

Sales are contracting

Profit Growth (YoY)

-69.7%

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

-₹5 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

Gross Margin

-2.4%

Proxy

Operating margin unavailable — showing gross margin instead

Net Margin

24.9%

Good

Strong bottom-line conversion

Current Ratio

2.88

Comfortable

Healthy short-term liquidity

Technical Snapshot

SMA 20 / SMA 50

95.6 / 94.1

Bullish alignment (short > long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

59.0

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹88 Cr	₹103 Cr	₹42 Cr	₹33 Cr	-28.2%
EBITDA	₹46 Cr	₹55 Cr	-₹1 Cr	₹1 Cr	-77.2%
EBITDA Margin	52.0%	53.0%	-2.5%	1.7%	—
PAT (Net Profit)	₹44 Cr	₹72 Cr	₹27 Cr	₹8 Cr	-43.1%
EPS	₹41.35	₹67.38	₹25.13	—	—
ROE	19.5%	24.1%	9.3%	2.7%	—
ROCE	25.0%	30.2%	10.8%	3.4%	—
Total Debt	₹6 Cr	₹6 Cr	₹4 Cr	—	—
Free Cash Flow	₹25 Cr	₹25 Cr	₹19 Cr	-₹5 Cr	—

🔴 Revenue has shrunk at 28.2% a year over 3 years.

🔴 EBITDA has shrunk at 77.2% a year over 3 years.

🔴 EBITDA Margin has fallen from 52.0% to 1.7% over 3 years (-50.3 pts).

🔴 PAT (Net Profit) has shrunk at 43.1% a year over 3 years.

🔴 ROE has fallen from 19.5% to 2.7% over 3 years (-16.8 pts).

🔴 ROCE has fallen from 25.0% to 3.4% over 3 years (-21.6 pts).

🔴 Free Cash Flow has turned negative, from ₹25 Cr to -₹5 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹299 Cr

Total Liabilities

₹4 Cr

Cash & Equivalents

₹0 Cr

Operating Cash Flow

-₹5 Cr

Capex

-₹0 Cr

Recent News

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

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Watch Items

Revenue growth is negative (-21.7%) on the latest reported period — check if this is one-off or a trend.
Cross-check against the company's latest quarterly filing / investor presentation before acting.
Sector/industry classification unavailable — verify manually for peer comparison.
4 metrics couldn't be retrieved for this stock — this is more common for smaller or thinly-covered listings.

DalalBaazaar Thesis

StrongFinancial Health

MiddlingProfitability · Valuation

WeakBusiness Quality · Growth · Risk

Points for each in the Score ↑

Weak on the fundamentals

Poor scores on business quality without a price low enough to compensate. There is no obvious argument for owning this over a stronger company at a similar valuation. 1 high-severity red flag sits above this conclusion and should be read first.

2 of 3 tripwires tripped — Free cash flow remains positive; ROCE stays above 8% · see Key things to watch ↑