Driven by negative free cash flow, the company is currently loss-making, micro-cap size, which brings thin liquidity.
In simple words: The company is currently losing money, with both sales and profits growing well. Cash generation is currently the main factor to watch.
Decision support, not a buy or sell call.
As of 18 Oct 2026, 6:10 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.
The 60-second version of Harikanta Overseas Limited — what it does, how it earns, and who it competes with, before any of the numbers below.
What does this company do?
Harikanta Overseas Limited manufactures and exports textile fabrics in India and Internationally. It manufactures synthetic textile fabrics.
IndustryTextile Manufacturing
SectorConsumer Cyclical
Employees85
Annual revenue₹35 Cr
How does it make money?
Turns over ₹35 Cr a year. Of every ₹100 of sales, about ₹13 reaches shareholders as profit, with ₹20 left at the operating level before interest, tax and depreciation. Each of its 85 employees supports ₹40.6 lakh of revenue a year, the signature of a people-led business.
EBITDA margin20.3%
Net margin12.9%
Revenue / employee₹40.6 lakh
Who are its competitors?
The closest listed comparisons in its industry are MARUTI SUZUKI INDIA LTD., TITAN COMPANY LIMITED, TRENT LTD, AVENUE SUPERMARTS LIMITED. These are the companies its valuation and returns are measured against elsewhere in this report.
MARUTI SUZUKI INDIA LTD.P/E 25.2x · ROE 13.4%
TITAN COMPANY LIMITEDP/E 68.5x · ROE 36.7%
TRENT LTDP/E 87.2x · ROE 25.9%
AVENUE SUPERMARTS LIMITEDP/E 69.9x · ROE 12.7%
What is its competitive advantage?The numbers suggest a real one
ROCE has stayed above 15% in every year available and stands at 38.9%. Returns that high normally get competed away; when they persist, something is protecting them, and its ROE of 41.2% against a peer median of 25.9% is consistent with that. What that something is — brand, scale, switching costs, regulation — the accounts cannot tell you.
ROCE38.9%
ROE41.2%
Peer median ROE25.9%
What has been driving growth?
Profit has moved mainly because margins changed, not because the business sold much more. Over 2 years revenue moved +140% while net margin moved +637% 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+140%
Margin effect+637%
DalalBaazaar Score
74/ 100
Good
Weighted across six categories. Every point is explained below.
✗ Micro Cap: thinner liquidity and sharper drawdowns are normal
✗ 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.
vs
Valuation
58/ 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.
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
P/E (Trailing)
—
P/B
2.44x
EV/EBITDA
10.2x
PEG
—
Dividend Yield
None
What's Good / What's Bad
🟢 What's Going Well5
Margins are improving
EBITDA margin is up from 4.5% to 20.3% over 2 years.
Return on equity is rising
ROE has improved from 22.0% to 32.4%.
Return on capital is rising
ROCE has improved from 23.9% to 38.9%.
High return on capital employed
ROCE of 38.9% is the mark of a business that converts capital into profit efficiently.
Very low debt
Debt/Equity of 0.24x leaves the balance sheet with plenty of headroom.
🔴 What Needs Attention4
Debt is rising
Total debt is up 144% over 2 years — worth checking what it funded.
Free cash flow is negative
The business is not currently covering its capital spending from operations.
Receivables growing faster than sales
Receivables are up 444% against revenue growth of 140% — customers are taking longer to pay.
Inventory building faster than sales
Inventory is up 3895% against revenue growth of 140% — stock may not be moving.
Red Flags
5 items require attention · 4 high · 1 watch
🔴Debt has risen sharplyFinancial
Total debt is up 144% over 2 years, from ₹1 Cr to ₹3 Cr.
🔴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.
🔴Receivables growing faster than salesFinancial
Receivables up 444% against revenue up 140% — sales are being booked faster than they are collected.
🔴Inventory building faster than salesFinancial
Inventory up 3895% against revenue up 140% — stock may not be moving.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹7 Cr in the latest year.
Investment Thesis
🟢 Bull CaseWhat could make this work?
Capital compounds at a high rate
ROCE of 38.9% 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 4.5% to 20.3%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
🔴 Bear CaseWhat could go wrong?
Sales are being booked faster than collected
Receivables are up 444% against revenue up 140%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
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
4 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 41% a year✓ 54.9% CAGR
Latest reported year was 226.3%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 18%✓ 20.3%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✗ -₹7 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 0.5x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 36%✓ 38.9%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.
Investment Checklist
8 / 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 buying right at the 52-week high
✗ Short-term technical trend isn't bearish
Price history
Quick Metrics
5 good · 4 neutral · 2 weak
Market Cap
₹70 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
2.44x
Fair
Moderate premium to the company's book value
EPS (TTM)
₹0
Loss-making
Negative earnings per share — the business is losing money
ROE
41.2%
Strong
Strong capital efficiency
ROCE
38.9%
Strong
Earns comfortably above its likely cost of capital
Debt/Equity
0.24x
Low
Conservative leverage
Revenue Growth (YoY)
226.3%
Healthy
Healthy top-line growth
Profit Growth (YoY)
445.0%
Healthy
Profits growing at a healthy clip
Dividend Yield
None
None
No dividend yield reported — usually means no payout, but verify if one was recently initiated
Free Cash Flow
-₹1 Cr
Cash burning
Spending more cash than the operations bring in
More Metrics
CMP
₹71
ROA
19.5%
Good
Assets are working hard
Operating Margin
19.8%
Good
Healthy core-business profitability
Net Margin
15.5%
Good
Strong bottom-line conversion
Current Ratio
2.26
Comfortable
Healthy short-term liquidity
52W Range Position
39%
Mid-range
Mid-range
Technical Snapshot
SMA 20 / SMA 50
67.3 / 68.0
Bearish alignment (short < long)
RSI (14)
61.7
Neutral momentum
Financial Trend (3-Year)
Metric
FY23
FY24
FY25
2Y CAGR
Revenue
₹14 Cr
₹11 Cr
₹35 Cr
+54.9%
EBITDA
₹1 Cr
₹1 Cr
₹7 Cr
+228.8%
EBITDA Margin
4.5%
12.6%
20.3%
—
PAT (Net Profit)
₹0 Cr
₹1 Cr
₹4 Cr
+320.7%
ROE
22.0%
41.7%
32.4%
—
ROCE
23.9%
40.8%
38.9%
—
Total Debt
₹1 Cr
₹1 Cr
₹3 Cr
+56.1%
Free Cash Flow
₹0 Cr
₹1 Cr
-₹7 Cr
—
🟢 Revenue has grown at 54.9% a year over 2 years.
🟢 EBITDA has grown at 228.8% a year over 2 years.
🟢 EBITDA Margin has risen from 4.5% to 20.3% over 2 years (+15.8 pts).
🟢 PAT (Net Profit) has grown at 320.7% a year over 2 years.
🟢 ROE has risen from 22.0% to 32.4% over 2 years (+10.4 pts).
🟢 ROCE has risen from 23.9% to 38.9% over 2 years (+15.0 pts).
🔴 Total Debt has grown at 56.1% a year over 2 years.
🔴 Free Cash Flow has turned negative, from ₹0 Cr to -₹7 Cr.
Cross-check against the company's latest quarterly filing / investor presentation before acting.
1 metric couldn't be retrieved for this stock — this is more common for smaller or thinly-covered listings.
DalalBaazaar Thesis
🟢Business QualityStrong17.9/20
🟢Financial HealthStrong13/20
🟢GrowthStrong18.5/20
🟢ProfitabilityStrong12.9/15
🟡ValuationFair8.7/15
🔴RiskHigh2.5/10
Good business at a fair price
A sound business at a reasonable valuation. Suitable for a long-term holding, with the valuation and the direction of margins worth watching rather than the business itself. 4 high-severity red flags sit above this conclusion and should be read first.
