Gujarat Natural Resources Limited

Energy — Oil & Gas E&P · NSE

₹95.10−₹1.18 (−1.23%)

DalalBaazaar Score

62 / 100

🟢 Good

Verdict

NEUTRAL

Risk

Very High

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

In simple words: The business is earning a fairly low return on the money invested in it, 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, 7:01 pm

Understanding the Business

Company site ↗

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

What does this company do?

Gujarat Natural Resources Limited, together with its subsidiaries, engages in the exploration and production of oil and natural gas in India. The company holds interests in producing 6 blocks, including five operated blocks in the Cambay basin.

IndustryOil & Gas E&P

SectorEnergy

Employees4

Annual revenue₹31 Cr

How does it make money?

Turns over ₹31 Cr a year. Of every ₹100 of sales, about ₹32 reaches shareholders as profit, with ₹67 left at the operating level before interest, tax and depreciation. Each of its 4 employees supports ₹7.63 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹7.63 Cr

Who are its competitors?

The closest listed comparisons in its industry are RELIANCE INDUSTRIES LTD, OIL AND NATURAL GAS CORP., BHARAT PETROLEUM CORP LT, INDIAN OIL CORP LTD. 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 6.5% 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 ROE15.4%

What has been driving growth?

Sales and margins have both contributed to where profit is now. Over 3 years revenue moved +129% while net margin moved -170% 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+129%

Margin effect-170%

DalalBaazaar Score

62/ 100

Good

Weighted across six categories. Every point is explained below.

✗ P/E of 69.9x is demanding — it needs sustained high growth to justify
✗ P/B of 6.85x is a steep premium to book

Quality vs. Valuation

Company Quality

73/ 100

Good

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

Valuation

24/ 100

Expensive

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

A good business, but the price already reflects that. The quality is real; the question is whether you are overpaying for it today.

Historical Valuation

Current P/E

69.9x

Sector Median

6.9x

median of 4 sector peers

⚠️Against its sector it trades 918% above the peer median of 6.9x.

vs. its own history

Not enough price and earnings history

vs. sector peers

Expensive

6.9x median of 4 peers · +918%

vs. generic bands

Expensive

Above 35x

EV/EBITDA

60.4x

PEG

—

What's Good / What's Bad

🟢 What's Going Well4

Margins are improving
EBITDA margin is up from 15.4% to 66.9% over 3 years.
Debt is being paid down
Total debt is down 63% over 3 years.
Return on equity is rising
ROE has improved from -5.5% to 4.7%.
Return on capital is rising
ROCE has improved from -2.4% to 6.5%.

🔴 What Needs Attention0

Nothing stands out as clearly deteriorating on the years of data available.

Red Flags

4 items require attention · 2 high · 2 watch

🔴High leverageFinancial
Debt/Equity of 6.38x — 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.
🟡Inventory building faster than salesFinancial
Inventory up 182% against revenue up 129% — stock may not be moving.
🟡Shareholders have been dilutedOwnership
Shares outstanding are up 49% over 3 years — each existing share owns a smaller slice of the company.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Margin expansion has further to run
EBITDA margin has risen from 15.4% to 66.9%. 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 63% over 3 years. Every rupee of interest not paid drops to the bottom line, so profit can grow even if revenue does not.

🔴 Bear CaseWhat could go wrong?

Leverage amplifies any setback
Debt/Equity of 6.38x. Interest is payable whether or not the business has a good year.
A premium to the sector to defend
It trades 918% above the peer median. That premium needs a reason that persists, or it closes.
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
2 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 24% a year✓ 31.9% CAGR
Latest reported year was 70.6%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 65%✓ 66.9%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✗ -₹2 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 0.7x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 8%✗ 6.5%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

5 / 10 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

Price history

Quick Metrics

3 good · 2 neutral · 6 weak

Market Cap

₹1,221 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

69.9x

Expensive

Expensive — verify against sector peers

P/B Ratio

6.85x

Rich

Steep premium to book — needs high, durable returns to justify

EPS (TTM)

₹1.36

Profitable

Profitable on a per-share basis

ROE

4.7%

Weak

Weak capital efficiency

ROCE

6.5%

Weak

Low return on total capital employed

Debt/Equity

6.38x

High

High leverage

Revenue Growth (YoY)

70.6%

Healthy

Healthy top-line growth

Profit Growth (YoY)

393.3%

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

-₹2 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

Operating Margin

172.7%

Good

Healthy core-business profitability

Net Margin

58.7%

Good

Strong bottom-line conversion

Current Ratio

3.18

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.76

Defensive

Steadier than the market

52W Range Position

Near low

Near its 52-week low

Technical Snapshot

RSI (14)

30.9

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹13 Cr	₹27 Cr	₹20 Cr	₹31 Cr	+31.9%
EBITDA	₹2 Cr	₹11 Cr	₹4 Cr	₹20 Cr	+115.1%
EBITDA Margin	15.4%	39.6%	21.5%	66.9%	—
PAT (Net Profit)	-₹6 Cr	-₹4 Cr	-₹4 Cr	₹10 Cr	—
EPS	₹-0.6	₹-0.38	₹-0.29	₹0.64	—
ROE	-5.5%	-3.6%	-2.5%	4.7%	—
ROCE	-2.4%	-1.3%	-0.6%	6.5%	—
Total Debt	₹36 Cr	₹41 Cr	₹12 Cr	₹13 Cr	-28.2%
Free Cash Flow	-₹2 Cr	-₹2 Cr	-₹33 Cr	-₹2 Cr	—

🟢 Revenue has grown at 31.9% a year over 3 years.

🟢 EBITDA has grown at 115.1% a year over 3 years.

🟢 EBITDA Margin has risen from 15.4% to 66.9% over 3 years (+51.5 pts).

🟢 PAT (Net Profit) has turned positive, from -₹6 Cr to ₹10 Cr.

🟢 EPS has turned positive, from ₹-0.6 to ₹0.64.

🟢 ROE has risen from -5.5% to 4.7% over 3 years (+10.2 pts).

🟢 ROCE has risen from -2.4% to 6.5% over 3 years (+8.8 pts).

🟢 Total Debt has shrunk at 28.2% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹244 Cr

Total Liabilities

₹36 Cr

Cash & Equivalents

₹2 Cr

Operating Cash Flow

₹67 Cr

Capex

-₹69 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

54.9%

Peer Comparison

Company	P/E	ROE
RELIANCE INDUSTRIES LTD	21.9x	8.3%
OIL AND NATURAL GAS CORP.	6.4x	11.7%
BHARAT PETROLEUM CORP LT	7.3x	17.1%
INDIAN OIL CORP LTD	5.3x	15.4%

Recent News

2 positive1 mixed3 general

Gujarat Natural Resources Sets November 5 Record Date For ₹10 To ₹1 Share Split

Sahi, 06 Oct

Gujarat Natural Resources sets November 5 as record date for the first-ever stock split. Details here

Livemint, 06 OctCapital return

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

Gujarat Natural Resources sets record date for 1:10 stock split

scanx.trade, 06 OctCapital return

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

Gujarat Natural Resources Share Price Rises 8.06% Today

Univest, 10 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.

Gujarat Natural Resources Ltd leads gainers in 'B' group

Business Standard, 25 Jun

Gujarat Natural Resources Ltd. Peer Comparison – Compare with Others

Value Research, 29 Aug

Watch Items

Trading very close to its 52-week low — worth checking whether this reflects a temporary setback or a structural problem.
Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

StrongBusiness Quality · Growth · Profitability

MiddlingFinancial Health

WeakValuation · Risk

Points for each in the Score ↑

Good business, demanding price

The quality is real and the price already reflects it. Buying here is a bet that the business keeps compounding for long enough to grow into the multiple — which good businesses often do, but it removes the margin for error that a lower price would have given you. 2 high-severity red flags sit above this conclusion and should be read first.

2 of 5 tripwires tripped — Free cash flow remains positive; ROCE stays above 8% · see Key things to watch ↑