EMS Limited

Industrials — Engineering & Construction · NSE

₹320.95−₹0.05 (−0.02%)

DalalBaazaar Score

49 / 100

🟡 Moderate

Verdict

CAUTION

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, 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, 6:09 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 EMS Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

EMS Limited constructs, designs, and installs water, wastewater, and domestic waste treatment facilities in India.

IndustryEngineering & Construction

SectorIndustrials

Employees624

Annual revenue₹733 Cr

How does it make money?

Turns over ₹733 Cr a year. Of every ₹100 of sales, about ₹12 reaches shareholders as profit, with ₹19 left at the operating level before interest, tax and depreciation. Each of its 624 employees supports ₹1.17 Cr of revenue a year, the signature of a capital- or asset-led business.

EBITDA margin19.4%

Net margin12.4%

Revenue / employee₹1.17 Cr

Who are its competitors?

The closest listed comparisons in its industry are LARSEN & TOUBRO LTD., ADANI PORT & SEZ LTD, SIEMENS LTD. 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%

ADANI PORT & SEZ LTDP/E 29.9x · ROE 14.1%

SIEMENS LTDP/E 88.8x · ROE 10.5%

What is its competitive advantage?Little sign of one

Returns on capital of 11.3% 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.

ROCE11.3%

ROE8.6%

Peer median ROE14.1%

What has been driving growth?

Sales and margins have both contributed to where profit is now. Over 3 years revenue moved +36% while net margin moved -38% 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+36%

Margin effect-38%

DalalBaazaar Score

49/ 100

Moderate

Weighted across six categories. Every point is explained below.

• Revenue CAGR of 10.8% is steady
✗ Profit has declined at 5.6% a year
✗ Profit is compounding slower than revenue — margins are being squeezed as the business grows
✗ Latest-year revenue growth of -34.2% is below the longer-term trend — momentum is fading
✗ Profit fell 59.1% in the latest year

Quality vs. Valuation

Company Quality

51/ 100

Average

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

Valuation

49/ 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

26.2x

3Y Median

20.7x

39 monthly readings · mean 20.3x · range 7.9x–43.2x

Sector Median

30.1x

median of 3 sector peers

⚠️Current valuation is approximately 26% above its 3y median of 20.7x. Paying more than usual needs a reason — faster growth, a better balance sheet, or a re-rating you believe in.

🟡Against its sector it is priced broadly in line with the peer median of 30.1x.

vs. its own history

Expensive

20.7x median over 39 months · +26%

vs. sector peers

Fair

30.1x median of 3 peers · -13%

vs. generic bands

Fair

15x–35x

P/E (Trailing)

26.2x

P/B

1.69x

EV/EBITDA

13.5x

PEG

—

Dividend Yield

0.47%

What's Good / What's Bad

🟢 What's Going Well2

Very low debt
Debt/Equity of 0.15x leaves the balance sheet with plenty of headroom.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention8

Margins are compressing
EBITDA margin has slipped from 28.1% to 19.4% over 3 years.
Debt is rising
Total debt is up 240% over 3 years — worth checking what it funded.
Free cash flow is negative
The business is not currently covering its capital spending from operations.
Return on equity is falling
ROE has dropped from 21.9% to 8.6% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 26.5% to 11.3% — often a sign of competition or overexpansion.
Receivables growing faster than sales
Receivables are up 214% against revenue growth of 36% — customers are taking longer to pay.
Inventory building faster than sales
Inventory is up 115% against revenue growth of 36% — stock may not be moving.
Valuation above its historical average
At 26.2x the stock trades 26% above its own median of 20.7x.

Red Flags

5 items require attention · 4 high · 1 watch

🔴Debt has risen sharplyFinancial
Total debt is up 240% over 3 years, from ₹45 Cr to ₹154 Cr.
🔴Significant margin compressionFinancial
EBITDA margin has fallen 8.7 points, from 28.1% to 19.4%.
🔴Receivables growing faster than salesFinancial
Receivables up 214% against revenue up 36% — sales are being booked faster than they are collected.
🔴Inventory building faster than salesFinancial
Inventory up 115% against revenue up 36% — stock may not be moving.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹88 Cr in the latest year.

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 28.1% to 19.4%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
Sales are being booked faster than collected
Receivables are up 214% against revenue up 36%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
The price already assumes success
The stock trades 26% above its own median multiple. At this level the business has to deliver just to stand still, and a stumble is repriced twice — lower earnings on a lower multiple.
Returns on shareholder capital are falling
ROE has dropped from 21.9% to 8.6%. 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.
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 8% a year✓ 10.8% CAGR
Latest reported year was -34.2%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 17%✓ 19.4%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✗ -₹88 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 1.1x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 8%✓ 11.3%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

5 / 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

2 good · 6 neutral · 3 weak

Market Cap

₹1,782 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

26.2x

Fair

Fairly valued against the generic band

P/B Ratio

1.69x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹12.27

Profitable

Profitable on a per-share basis

ROE

8.6%

Moderate

Moderate capital efficiency

ROCE

11.3%

Moderate

Moderate return on the capital in the business

Debt/Equity

0.15x

Low

Conservative leverage

Revenue Growth (YoY)

-34.2%

Shrinking

Sales are contracting

Profit Growth (YoY)

-59.1%

Falling

Profits are shrinking

Dividend Yield

0.47%

Modest

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

Free Cash Flow

-₹88 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

CMP

₹320.95

Operating Margin

15.2%

Good

Healthy core-business profitability

Net Margin

10.5%

Good

Strong bottom-line conversion

Current Ratio

5.03

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.36

Defensive

Steadier than the market

52W Range Position

22%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

338.5 / 365.1

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

22.7

Oversold zone

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹538 Cr	₹793 Cr	₹972 Cr	₹733 Cr	+10.8%
EBITDA	₹151 Cr	₹208 Cr	₹261 Cr	₹142 Cr	-2.0%
EBITDA Margin	28.1%	26.2%	26.9%	19.4%	—
PAT (Net Profit)	₹108 Cr	₹152 Cr	₹184 Cr	₹91 Cr	-5.6%
EPS	₹19.39	₹29.38	₹33.05	₹16.3	-5.6%
ROE	21.9%	19.1%	18.8%	8.6%	—
ROCE	26.5%	23.6%	23.6%	11.3%	—
Total Debt	₹45 Cr	₹71 Cr	₹86 Cr	₹154 Cr	+50.3%
Free Cash Flow	-₹5 Cr	-₹149 Cr	₹30 Cr	-₹88 Cr	—

🟢 Revenue has grown at 10.8% a year over 3 years.

🟡 EBITDA has been broadly flat over 3 years (-2.0% a year).

🔴 EBITDA Margin has fallen from 28.1% to 19.4% over 3 years (-8.7 pts).

🔴 PAT (Net Profit) has shrunk at 5.6% a year over 3 years.

🔴 EPS has shrunk at 5.6% a year over 3 years.

🔴 ROE has fallen from 21.9% to 8.6% over 3 years (-13.4 pts).

🔴 ROCE has fallen from 26.5% to 11.3% over 3 years (-15.1 pts).

🔴 Total Debt has grown at 50.3% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹1,331 Cr

Total Liabilities

₹272 Cr

Total Debt

₹154 Cr

Cash & Equivalents

₹17 Cr

Operating Cash Flow

-₹15 Cr

Capex

-₹73 Cr

Shareholding (proxy)

Institutional Holding

0.3%

Insider Holding

69.7%

Corporate Actions

Dividend Rate

₹1.5

Ex-Dividend Date

18 Sept 2026

Peer Comparison

Company	P/E	ROE
LARSEN & TOUBRO LTD.	30.1x	15.2%
ADANI PORT & SEZ LTD	29.9x	14.1%
SIEMENS LTD	88.8x	10.5%

Recent News

1 positive3 mixed2 general

EMS Share Price Target 2027 to 2030: Analyst Outlook

Univest, 17 AugAnalyst view

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

Compare with

Equitymaster, 15 Oct

EMS shares gain 3% on project win worth Rs 1,908 crore in Rajasthan

Moneycontrol.com, 20 AugPrice 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.

EMS Gets ₹129.80 Crore Jodhpur Sewerage LOA; Shares Fall 1.17%

HDFC Sky, 08 OctPrice 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.

EMS zooms 17% on bagging ₹103 cr sewer network order from UP Jal Nigam

Business Standard, 08 Jun

EMS Share Price Jumps - 1,908 crore Rajasthan Project Bolsters Order Book

Alice Blue, 20 AugOrder win

🟢Potentially positiveOrder wins add to future revenue, though the effect depends on the contract's size against annual sales and on when it is executed.

Watch Items

Revenue growth is negative (-34.2%) 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.
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

🟡Business QualityAdequate10.5/20

🟢Financial HealthStrong13/20

🔴GrowthWeak7.7/20

🟡ProfitabilityModerate6.9/15

🔴ValuationDemanding6.1/15

🔴RiskHigh4.4/10

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. 4 high-severity red flags sit above this conclusion and should be read first.

This thesis breaks if

✓Revenue growth stays above 8% a year10.8% CAGR
✓EBITDA margin holds above 17%19.4%
✗Free cash flow remains positive-₹88 Cr
✓Debt / EBITDA stays below 2x1.1x
✓ROCE stays above 8%11.3%