Garnet Construction Limited

Real Estate — Real Estate - Development · BSE

₹51.55+₹1.67 (+3.35%)

DalalBaazaar Score

79 / 100

🟢 Good

Verdict

ATTRACTIVE

Risk

High

Driven by high debt relative to equity, negative free cash flow, micro-cap size, which brings thin liquidity.

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

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:02 pm

Mixed / neutral. No major red flags jump out, but nothing here screams "obviously cheap" either. This is a name that needs a peer comparison and a view on near-term earnings triggers before sizing a position.

Understanding the Business

Company site ↗

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

What does this company do?

Garnet Construction Limited operates as a real estate development company in India.

IndustryReal Estate - Development

SectorReal Estate

Employees45

Annual revenue₹83 Cr

How does it make money?

Turns over ₹83 Cr a year. Of every ₹100 of sales, about ₹48 reaches shareholders as profit, with ₹72 left at the operating level before interest, tax and depreciation. Each of its 45 employees supports ₹1.84 Cr of revenue a year, the signature of a capital- or asset-led business.

EBITDA margin72.0%

Net margin47.7%

Revenue / employee₹1.84 Cr

Who are its competitors?

The closest listed comparisons in its industry are DLF LIMITED, GODREJ PROPERTIES LTD, OBEROI REALTY LIMITED. These are the companies its valuation and returns are measured against elsewhere in this report.

DLF LIMITEDP/E 36.6x · ROE 10.3%

GODREJ PROPERTIES LTDP/E 30.2x · ROE 8.4%

OBEROI REALTY LIMITEDP/E 23.5x · ROE 14.7%

What is its competitive advantage?Some evidence

ROCE of 35.3% is above what capital typically costs, which suggests some pricing power, though not yet the sustained, wide gap that marks a durable advantage.

ROCE35.3%

ROE27.7%

Peer median ROE10.3%

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 +4013% while net margin moved +229% 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+4013%

Margin effect+229%

DalalBaazaar Score

79/ 100

Good

Weighted across six categories. Every point is explained below.

✓ Beta of 0.68 — historically steadier than the index
✗ Micro Cap: thinner liquidity and sharper drawdowns are normal
✗ High leverage magnifies any downturn in earnings
✗ 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

83/ 100

Excellent

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

Valuation

88/ 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

3.6x

3Y Median

16.5x

40 monthly readings · mean 40.5x · range 1.6x–134.3x

Sector Median

30.2x

median of 3 sector peers

🟢Current valuation is approximately 78% below its 3y median of 16.5x. 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 88% below the peer median of 30.2x.

vs. its own history

Cheap

16.5x median over 40 months · -78%

vs. sector peers

Cheap

30.2x median of 3 peers · -88%

vs. generic bands

Cheap

Below 15x

P/E (Trailing)

3.6x

P/B

0.50x

EV/EBITDA

1.4x

PEG

0.01

Dividend Yield

None

What's Good / What's Bad

🟢 What's Going Well7

Margins are improving
EBITDA margin is up from 48.8% to 72.0% over 3 years.
Debt is being paid down
Total debt is down 38% over 3 years.
Return on equity is rising
ROE has improved from 0.3% to 27.7%.
Return on capital is rising
ROCE has improved from 0.6% to 35.3%.
High return on capital employed
ROCE of 35.3% is the mark of a business that converts capital into profit efficiently.
Valuation below its historical average
At 3.6x the stock trades 78% below its own median of 16.5x.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention1

Free cash flow is negative
The business is not currently covering its capital spending from operations.

Red Flags

3 items require attention · 3 high

🔴High leverageFinancial
Debt/Equity of 5.75x — earnings must service borrowings before shareholders see anything.
🔴Free cash flow negative for 4 yearsFinancial
The business has not covered its capital spending from operations for several years running, which has to be funded externally.
🔴Profit up while operating cash flow fallsFinancial
Reported profit rose but cash generated by operations declined — worth checking whether earnings are being supported by non-cash items or working capital.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 35.3% 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 48.8% to 72.0%. 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 38% 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 78% 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 88% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.

🔴 Bear CaseWhat could go wrong?

Leverage amplifies any setback
Debt/Equity of 5.75x. Interest is payable whether or not the business has a good year.
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.
Several serious flags at once
3 high-severity checks triggered. Individually each has an explanation; together they raise the chance that something structural is wrong rather than a one-off.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 184% a year✓ 245.2% CAGR
Latest reported year was 414.7%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 70%✓ 72.0%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✗ -₹3 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 0.2x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 32%✓ 35.3%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

8 / 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

7 good · 2 neutral · 2 weak

Market Cap

₹72 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

3.6x

Cheap

Cheap against the generic band

P/B Ratio

0.50x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹14.4

Profitable

Profitable on a per-share basis

ROE

27.7%

Strong

Strong capital efficiency

ROCE

35.3%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

5.75x

High

High leverage

Revenue Growth (YoY)

414.7%

Healthy

Healthy top-line growth

Profit Growth (YoY)

433.1%

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

-₹3 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

CMP

₹51.55

Operating Margin

697.9%

Good

Healthy core-business profitability

Net Margin

47.8%

Good

Strong bottom-line conversion

Current Ratio

3.28

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.68

Defensive

Steadier than the market

52W Range Position

10%

Near low

Near its 52-week low

Technical Snapshot

SMA 20 / SMA 50

47.8 / 52.8

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

61.5

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹2 Cr	₹11 Cr	₹16 Cr	₹83 Cr	+245.2%
EBITDA	₹1 Cr	₹5 Cr	₹11 Cr	₹60 Cr	+292.9%
EBITDA Margin	48.8%	45.7%	68.7%	72.0%	—
PAT (Net Profit)	₹0 Cr	₹3 Cr	₹7 Cr	₹39 Cr	+413.5%
EPS	₹0.21	₹2.11	₹5.33	₹28.39	+413.4%
ROE	0.3%	3.1%	7.2%	27.7%	—
ROCE	0.6%	4.5%	9.8%	35.3%	—
Total Debt	₹15 Cr	₹11 Cr	₹9 Cr	₹9 Cr	-14.9%
Free Cash Flow	-₹1 Cr	-₹2 Cr	-₹0 Cr	-₹3 Cr	—

🟢 Revenue has grown at 245.2% a year over 3 years.

🟢 EBITDA has grown at 292.9% a year over 3 years.

🟢 EBITDA Margin has risen from 48.8% to 72.0% over 3 years (+23.2 pts).

🟢 PAT (Net Profit) has grown at 413.5% a year over 3 years.

🟢 EPS has grown at 413.4% a year over 3 years.

🟢 ROE has risen from 0.3% to 27.7% over 3 years (+27.4 pts).

🟢 ROCE has risen from 0.6% to 35.3% over 3 years (+34.6 pts).

🟢 Total Debt has shrunk at 14.9% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹215 Cr

Total Liabilities

₹73 Cr

Total Debt

₹9 Cr

Cash & Equivalents

₹0 Cr

Operating Cash Flow

-₹1 Cr

Capex

-₹2 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

66.4%

Peer Comparison

Company	P/E	ROE
DLF LIMITED	36.6x	10.3%
GODREJ PROPERTIES LTD	30.2x	8.4%
OBEROI REALTY LIMITED	23.5x	14.7%

Recent News

2 positive3 mixed1 general

Top 15 Low-Price Stocks In India To Buy In October 2026

Samco, 17 Oct

Garnet Construction Q1 Results: Net Loss Of ₹103.8 Lakh, Revenue Turns Negative

scanx.trade, 14 AugResults

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

Garnet Construction reports standalone net loss of Rs 1.04 crore in the June 2026 quarter

Business Standard, 14 AugResults

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

Garnet Construction FY26 net profit rises 433% to ₹3,948 lakh

scanx.trade, 30 MayResults

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

Garnet Construction sets Sept 30 AGM to adopt FY26 results

scanx.trade, 22 SeptResults

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

Noble Polymers standalone net profit rises 676.92% in the June 2026 quarter

Business Standard, 14 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.

DalalBaazaar Thesis

🟢Business QualityStrong17.9/20

🟡Financial HealthAdequate11.9/20

🟢GrowthStrong18.5/20

🟢ProfitabilityStrong13.5/15

🟢ValuationAttractive13.2/15

🔴RiskHigh3.7/10

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

This thesis breaks if

✓Revenue growth stays above 184% a year245.2% CAGR
✓EBITDA margin holds above 70%72.0%
✗Free cash flow remains positive-₹3 Cr
✓Debt / EBITDA stays below 2x0.2x
✓ROCE stays above 32%35.3%