GEM Enviro Management Limited

Industrials — Waste Management · BSE

₹39.30+₹2.30 (+6.22%)

DalalBaazaar Score

44 / 100

🟡 Moderate

Verdict

CAUTION

Risk

Very High

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

In simple words: Reasonable but unspectacular business quality, though profits are falling even as sales grow. Debt is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:01 pm

Understanding the Business

Company site ↗

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

What does this company do?

GEM Enviro Management Limited engages in the waste management business in India.

IndustryWaste Management

SectorIndustrials

Employees36

Annual revenue₹102 Cr

How does it make money?

Turns over ₹102 Cr a year. Of every ₹100 of sales, about ₹5 reaches shareholders as profit, with ₹6 left at the operating level before interest, tax and depreciation. Each of its 36 employees supports ₹2.83 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹2.83 Cr

Who are its competitors?

The closest listed comparisons in its industry are LARSEN & TOUBRO LTD., SIEMENS LTD, ABB INDIA LIMITED. 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 12.3% 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.

Peer median ROE15.2%

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 +139% while net margin moved -80% 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+139%

Margin effect-80%

DalalBaazaar Score

44/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ ROE of 9.3% is weak
✗ ROE has fallen by 32.9 points over the period

Quality vs. Valuation

Company Quality

42/ 100

Weak

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

Valuation

67/ 100

Fair

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

Weak on business quality and not cheap enough to compensate.

Historical Valuation

Current P/E

18.7x

3Y Median

17.2x

30 monthly readings · mean 21.0x · range 11.6x–51.4x

Sector Median

88.8x

median of 3 sector peers

🟡Currently trading close to its 3y median of 17.2x — the market is paying about what it usually pays for this company.

🟢Against its sector it trades 79% below the peer median of 88.8x.

vs. its own history

Fair

17.2x median over 30 months · +9%

vs. sector peers

Cheap

88.8x median of 3 peers · -79%

vs. generic bands

Fair

15x–35x

EV/EBITDA

13.5x

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 41.8% to 8.9% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 54.6% to 12.3% — often a sign of competition or overexpansion.

Red Flags

5 items require attention · 3 high · 2 watch

🔴High leverageFinancial
Debt/Equity of 9.43x — earnings must service borrowings before shareholders see anything.
🔴Significant margin compressionFinancial
EBITDA margin has fallen 24.9 points, from 31.3% to 6.4%.
🔴Inventory building faster than salesFinancial
Inventory up 1329% against revenue up 139% — stock may not be moving.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹8 Cr in the latest year.
🟡Profit is decliningFinancial
Net profit is down 53% over 3 years.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Cheaper than its peers
It trades 79% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.
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 31.3% to 6.4%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
Leverage amplifies any setback
Debt/Equity of 9.43x. Interest is payable whether or not the business has a good year.
Returns on shareholder capital are falling
ROE has dropped from 41.8% to 8.9%. 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.
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 25% a year✓ 33.8% CAGR
Latest reported year was 27.0%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 4%✓ 6.4%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✗ -₹8 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 0.8x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 9%✓ 12.3%
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

₹89 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

18.7x

Fair

Fairly valued against the generic band

P/B Ratio

1.67x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹2.1

Profitable

Profitable on a per-share basis

ROE

9.3%

Moderate

Moderate capital efficiency

ROCE

12.3%

Moderate

Moderate return on the capital in the business

Debt/Equity

9.43x

High

High leverage

Revenue Growth (YoY)

27.0%

Healthy

Healthy top-line growth

Profit Growth (YoY)

-11.2%

Falling

Profits are shrinking

Dividend Yield

0.64%

Modest

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

Free Cash Flow

-₹9 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

ROA

5.4%

Average

Average asset productivity

Operating Margin

3.0%

Weak

Thin margins leave little room for error

Net Margin

4.6%

Average

Average bottom-line conversion

Current Ratio

4.42

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.83

Market-like

Moves roughly in line with the market

52W Range Position

18%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

36.7 / 35.6

Bullish alignment (short > long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

42.6

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹43 Cr	₹34 Cr	₹59 Cr	₹102 Cr	+33.8%
EBITDA	₹13 Cr	₹15 Cr	₹8 Cr	₹7 Cr	-21.1%
EBITDA Margin	31.3%	46.1%	14.2%	6.4%	—
PAT (Net Profit)	₹10 Cr	₹11 Cr	₹6 Cr	₹5 Cr	-22.3%
EPS	₹4.47	₹5.01	₹2.74	—	—
ROE	41.8%	33.2%	12.4%	8.9%	—
ROCE	54.6%	44.8%	16.6%	12.3%	—
Free Cash Flow	₹8 Cr	₹4 Cr	-₹10 Cr	-₹8 Cr	—

🟢 Revenue has grown at 33.8% a year over 3 years.

🔴 EBITDA has shrunk at 21.1% a year over 3 years.

🔴 EBITDA Margin has fallen from 31.3% to 6.4% over 3 years (-24.9 pts).

🔴 PAT (Net Profit) has shrunk at 22.3% a year over 3 years.

🔴 ROE has fallen from 41.8% to 8.9% over 3 years (-32.9 pts).

🔴 ROCE has fallen from 54.6% to 12.3% over 3 years (-42.3 pts).

🔴 Free Cash Flow has turned negative, from ₹8 Cr to -₹8 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹68 Cr

Total Liabilities

₹15 Cr

Total Debt

₹5 Cr

Cash & Equivalents

₹5 Cr

Operating Cash Flow

-₹8 Cr

Capex

-₹0 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

63.9%

Corporate Actions

Dividend Rate

₹0.25

Ex-Dividend Date

21 Sept 2026

Peer Comparison

Company	P/E	ROE
LARSEN & TOUBRO LTD.	30.1x	15.2%
SIEMENS LTD	88.8x	10.5%
ABB INDIA LIMITED	92.6x	19.1%

Recent News

1 positive2 mixed3 general

GEM Enviro FY26 profit drops 23.6%, announces dividend

scanx.trade, 11 MayCapital return

🟢Potentially positiveCash or shares returned to holders. A buyback is only good value if the shares were cheap when bought.

GEM Enviro To Buy 75% Novuscom Stake; Shares Rise 0.73%

HDFC Sky, 16 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.

GEM Enviro Management Ltd Shareholding Pattern – Promoters, FIIs & DIIs

Value Research, 02 Sept

Gem Enviro revises stake acquisition in Solluz Energy to ₹5.28 crore

scanx.trade, 12 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.

GEM Enviro Management Limited Share Price

Upstox, 11 Nov

15 Best Waste Management Stocks In India 2026 - Top Picks For ESG Investors

Samco, 26 Feb

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

MiddlingFinancial Health · Valuation

WeakBusiness Quality · Growth · Profitability · 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. 3 high-severity red flags sit above this conclusion and should be read first.

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